How were they selling a dollar for 80 cents? The actual food is more expensive on grubhub than ordering through the restaurant, and then there are multiple fees on top of that.
Tons of marketing/advertising. The free GrubHub+ subscription through prime probably burned through a lot of cash. I doubt Amazon was paying them very much (if anything) to Grubhub. Then you have all of the corporate staff (around 3k based on google search) who are highly paid.
And the competition from UberEats and Doordash, who also are constantly promoting discounts, free orders, etc. so there's almost no way they can recoup actual costs let alone turn a profit.
But there is the cost of hosting, developers, drivers, etc.
And that's all cost that is not borne by the restaurant.
And there is a limit to how much people would pay to get something delivered. So they're probably pricing the delivery, etc less than they've actually paid.
We've seen this before and we'll see it again. There are lots of people who will pay for things below cost. Sometimes that cost comes down but a lot of the time it does not especially in relatively affluent countries. I don't have a personal driver or chef like I might have in some places. I do have some other house/yard services but very occasionally and I consider them luxuries.
I always wondered if the promotions were handled with restaurants more like "we (the platform) recoup our promo losses via the regular platform fee you (the restaurant) pay regardless" or more like "if a customer uses a promotion, we (platform and restaurant) split the loss, unrelated to the regular platform fee". Like when I use a platform promo for reasons well beyond trying a new place for the first time, am I screwing the restaurant, the platform, or some combination?
Mostly the restaurant, at least in the case of these companies' "free delivery" membership deals. Restaurants pay a higher commission on those orders. (Whether that's enough to outweigh the operating deficit built into their current pricing I have no idea, but some fraction is being passed along to their merchant "partners".)
It was an all stock transaction, so they maintained an indirect stake but it was significantly diluted: https://en.wikipedia.org/wiki/Just_Eat_Takeaway.com Meanwhile Just Eat Takeaway investors got taken for a ride.
The degree to which startups with unsustainable business models can be called pump and dump schemes is debated. I wasn’t suggesting they committed fraud, but they definitely put their best foot forward before that transaction and believed it was in their interest to sell.
Also it’s not just unrelated 3rd parties, Enron was included because: “Enron falsely reported profits which inflated the stock price, they covered the real numbers by using questionable accounting practices. Twenty-nine Enron executives sold overvalued stock for more than a billion dollars before the company went bankrupt.”
all of it, including its future, was valued at $7 billion, but there was never $7 billion in cash. Maybe it was $700 million in cash paid for 10% of it, which would value the whole thing at $7 billion. If that totally-made-up 10% number happens to be the right number, then it hasn't lost much at all overall, but the investor who paid that has to share the sale price with a bunch of other shareholders who paid less. So, this owner lost money, but the firm did not necessarily.
(I'm not saying this is what happened, and maybe a quick google would get us closer to the actual numbers, I'm just saying you have to pay attention to the wording of what is being claimed; media likes to exaggerate.)
what has disappeared is "belief in the future prospects of this company to bring in profits worth $7B" which was why the last investors invested, and why the early investors set up the kitchens and other frameworks to support those hopes. And it's not that the opportunity wasn't a good one, perhaps a competitor "won", or perhaps there are too many competitors trying to share the $7B pie.
