Grubhub Inc. reported a loss in its most recent quarter, evidence of the pressure on food-delivery companies vying for customers with discounts and expansion efforts.
The Chicago-based company on Wednesday said sales rose to $341 million for the quarter that ended in December, a 19% increase from $288 million a year earlier. The company reported 23 million active diners at the end of last year, compared with 18 million in the final 2018 quarter.
But Grubhub’s adjusted earnings for the quarter swung to a loss of $4.2 million from a profit of $17.6 million a year earlier.
Grubhub said in a shareholder letter that its efforts to recruit new diners and restaurants were helping. Executives said its financial performance was at the high end of expectations, and the number of restaurants on its platform had more than doubled in three months.
Shares rose 6% in after-hours trading to $59.
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Grubhub is struggling alongside other players in a food-delivery industry that is in flux. DoorDash Inc., Uber Technologies Inc.’s Uber Eats and Postmates Inc. have spent millions of dollars to move into new U.S. markets and grab share. Grubhub said last year that it would sacrifice profit to compete. Some executives and investors say they expect consolidation in the industry this year.
Grubhub said it couldn’t provide exact earnings guidance for 2020, writing in a letter to shareholders that it expected profit of at least $100 million for the full fiscal year. Executives said it isn’t clear how much they will spend on efforts to gain share and keep diners loyal.
Some delivery companies were quicker than Grubhub to strike exclusive delivery deals with big restaurant chains. Delivering food from chains can be less profitable than from independent restaurants, but order volumes are often higher.
Grubhub is now adopting those tactics. The company in the past year has struck delivery deals with McDonald’s Corp., Shake Shack Inc. and Applebee’s, which is owned by Dine Brands Global Inc. It also started offering free and low-cost delivery from KFC and Taco Bell restaurants—both owned by Yum Brands Inc. —and other chains.
Grubhub is also following competitors in a practice of adding restaurants to its platform without any prior agreement. Some restaurants have criticized Grubhub for posting their menus on its app without their approval.
Looking to draw in new delivery partners, Grubhub last month introduced a system for restaurants, stadiums and other food-service providers to accept and process pickup orders online.
For the quarter, Grubhub reported a loss of $27.7 million, or negative 30 cents per diluted share, a drop from a negative $5.2 million, or a negative 6 cents, the prior year.
It reported a full-year loss of $18.6 million, down from a gain of $78.5 million in 2018. Adjusted earnings per share were 79 cents, roughly meeting expectations.
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