Councilman Gjonaj not in favor of Grubhub acquisition

Grubhub sign posted in the ground in Humble, Texas.
Photo via Getty Images

Last week, the newly-minted Just Eat, bought, making it the second largest restaurant delivery company in the United States.

For months, Councilman Mark Gjonaj, chair of the small business committee, fought to limit the powers of third party apps. In May, he helped pass a series of COVID-19 relief bills including one that will cap delivery fees at 15 percent, instead of the usual 30 percent.

Reggie Johnson, Gjonaj’s chief of staff, said the councilman is worried that Just Eat will target small businesses like Grubhub did and try to run them into the ground. Gjonaj and other legislators are hoping to make these bills permanent when the state of emergency ends, but nothing is set in stone.

Johnson said this transaction shocked everyone and most people were under the impression Uber was going to acquire Grubhub.

“There have been some real lapses on how they carried this out,” Johnson said. “Grubhub has not always been the best corporate citizen.”

On June 10, Just Eat and Grubhub Inc. entered into an agreement whereby the company is to acquire 100 percent of the shares of Grubhub in an all-stock transaction to create the world’s largest online food delivery company outside of China.

Grubhub is a leading online and mobile food-ordering and delivery marketplace in the U.S., with nearly 300,000 restaurants across 4,000 cities. Its portfolio of brands includes Grubhub, Seamless, LevelUp, AllMenus and MenuPages.

Executive director of the NYC Hospitality Alliance, Andrew Rigie, hopes Just Eat takes Grubhub in a different direction.

“Assuming Just Eat did its due diligence, they know they paid billions for Grubhub’s horrible reputation among restaurant owners in New York City and around the nation,” Rigie said. “Grubhub’s new corporate owners now have a responsibility to change the company’s predatory practices and improve relationships with restaurants.”

Johnson told the Bronx Times an investor call took place Thursday morning, where Just Eat told people it was a similar company to Grubhub, which worried Gjonaj, Johnson said.

Grubhub has been accused of charging restaurants erroneous phone fees and Johnson explained it was profitable because it took money from drivers and cash off listing fees from restaurants.

Meanwhile, Uber, DoorDash and Postmates, are losing money because they are focused on logistics, such as happy drivers, insurance and background checks.

The councilman expressed his concerned, as Grubhub makes up 53 percent of the restaurant sales in NYC.

“This may be a bigger Grubhub with bigger marketing,” Johnson said. “We want to see what this company is going to do and what it is about.”

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