Food delivery platform Grubhub has now experienced two major leadership changes in less than two years.
The U.S. arm of Just Eat Takeaway (OTCUS: JTKWY) announced on Monday that CEO Adam DeWitt, an 11-year veteran of the company, will step down. He will be replaced by Howard Migdal, who heads Grubhub’s Canadian counterpart SkipTheDishes.
The shakeup comes just 21 months after DeWitt replaced former chief executive Matt Maloney in June 2021. He’ll remain with the company until May 1 before Migdal takes over.
The move takes place as Just Eat continues to “actively explore” the partial or full sale of Grubhub, a plan that was announced just over a year after it was acquired — and one that could result in a massive, multibillion-dollar loss on the investment.
“It’s hard to leave Grubhub, but it’s the right time for me after 11 years,” DeWitt said. “I am incredibly proud of what this team has accomplished and will forever value the relationships I’ve forged here. Grubhub is in great hands with Howard and the Grubhub leadership team, and I’m excited to watch the company continue to thrive.”
Since DeWitt joined Grubhub in 2012, the company has transformed from a small aggregator bringing in $20 million per year to a food delivery powerhouse raking in $2 billion annually. As chief financial officer, he led the firm’s launch of an initial public offering in 2014 and presided over its sale to Just Eat in 2021. He stepped into Maloney’s role shortly after.
Migdal, the new head of the company, is also a food delivery veteran. After six years with Just Eat and an additional four with SkipTheDishes, he became the Canadian platform’s CEO this past November. He’s also the co-founder of GrubCanada, the country’s first-ever nationwide food delivery platform, which Just Eat acquired in 2011.
As CEO of Grubhub, Migdal will be responsible for rejuvenating Just Eat’s North America business, which has struggled in recent years.
“We are grateful for [DeWitt’s] leadership and dedication to the company, and we wish him all the best in his future endeavors,” said Just Eat chief executive Jitsi Groen. “We are also excited to promote [Migdal] as the new leader of our North America segment and Grubhub’s new CEO. He has a proven track record as a leader with a deep understanding of our business, and we are confident in his ability to lead and grow the business into the future.”
Watch: Getting the food to the people
The pandemic has done wonders for some food delivery platforms, driving record-high order and sales numbers. DoorDash, for instance, grew total orders by 27% year over year in Q4 2022, which translated to a 40% y/y increase in revenue. Uber Eats, meanwhile, saw fiscal year 2022 delivery gross bookings and revenue climb 14% and 21% y/y, respectively.
But Grubhub has struggled to maintain its once vaunted position as the top dog among food delivery apps. In 2022, the platform received 16% fewer orders and made 11% fewer sales compared with 2021.
And in February, it accounted for just 9% of U.S. food delivery app sales, dwarfed by DoorDash’s 65% share and Uber Eats’ 23%, per Bloomberg Second Measure. In January 2018, it captured nearly half of all such sales.
Grubhub did, however, manage to claw its way back to an adjusted earnings before inflation, taxes, depreciation and amortization figure of $65 million, up from a loss of $28 million in 2021.
Still, that tidbit of good news hasn’t slowed Just Eat’s efforts to shop Grubhub, though reports suggest it will have a difficult time finding a buyer.
Groen blamed the implementation of commission caps, which limited what food delivery apps could charge merchants. U.S. cities like New York and San Francisco enacted such measures during the pandemic to shield local merchants from a dip in demand. Some cities have since removed them.
Even so, Just Eat has yet to find a buyer for Grubhub, and it admitted in its FY 2022 earnings report that it’s uncertain whether it ever will.
Things got even murkier on Tuesday, when the company filed for deregistration from the U.S. Securities and Exchange Commission, citing low trading volumes and high expenses.
This means the company’s American depositary receipts will no longer be traded on the OTC Markets, though they can still be bought and sold on the London Stock Exchange and Euronext Amsterdam.
As Just Eat targets an adjusted EBITDA of around $240 million for 2023, the hope is that delisting from U.S. markets gives the firm more money to put into growing its business and regaining market share from its rivals.
Click for more FreightWaves articles by Jack Daleo.
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