GrubHub (GRUB 138.70, +3.89, +2.88%) was trading higher after it announced another
acquisition. It has now begun trading down. Grubhub will acquire Tapingo, a
platform for campus food ordering.
GrubHub is the largest online and mobile platform for takeout and delivery of takeout restaurant orders. It connects diners with over 85,000 independent restaurants in 1,600+ US cities and London. The company's primary revenue source is a 15% commission fee that is paid by the restaurant on each order. The Grubhub portfolio of brands includes Grubhub, Seamless, LevelUp, Eat24, AllMenus, and MenuPages.
A key strategy for GRUB has been to enter into partnerships with key online players. For example, in Summer 2017, GRUB announced key partnerships with Yelp (YELP) and Groupon (GRPN). GrubHub acquired Yelp's Eat24 business (a rival to GRUB) and Yelp integrated online ordering from all GrubHub restaurants onto its platform. Diners now have the ability to order from 75,000 restaurants through either GrubHub's or Yelp's interface.
Then, in February 2018, GRUB announced a deal with Yum! Brands (YUM) to provide online ordering and delivering for KFC and Taco Bell orders. YUM also acquired a $200 mln stake in GRUB as part of the deal. In May 2018, GRUB announced a partnership with Jack in the Box (JACK) to provide delivery for hundreds of locations. Any color on the progress of these deals or potential new partners would be of high importance to investors.
After a July announcement, GRUB, just this month, closed on its acquisition of LevelUp, which has a mobile platform that makes it easier for restaurants like KFC, Taco Bell, Bareburger, and Roti to integrate with the Grubhub marketplace. LevelUp also accelerates Grubhub's existing point-of-sale (POS) integration capabilities and provides restaurants with CRM and analytical tools to help them drive more diners to their platform. Grubhub will pay $390 mln in cash to acquire LevelUp.
Today's deal to acquire Tapingo is on the smaller side, for ~$150 mln. Tapingo is based in Israel and is a platform for campus food ordering. With over 150 college campus partners, Tapingo enables tens of thousands of order-ahead transactions per day at on-campus cafes, restaurants, and cashier-less stores.
Tapingo's platform is custom designed for campus use, with direct integration into college meal plans and point-of-sale (POS) systems, ensuring seamless order-taking and accurate, up-to-the-minute transparency on wait times for diners. The Tapingo platform also streamlines operations and increases in-store efficiency for campus restaurant partners—including Taco Bell, Chipotle, Chick-fil-A, Panda Express, and Jamba Juice—and powers partnerships with Aramark and Sodexo, which are providers of food services and facilities management nationwide.
A big reason to do this deal is that GRUB sees value in the college student population. The hope is that many of these people will become life-long Grubhub diners. The transaction is expected to close in 4Q18.
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