Just Eat pulls its SkipTheKitchen delivery firm out of the US
- Winnipeg-based food delivery company SkipTheDishes announced it will leave the U.S. market after three years in operation domestically. According to the Buffalo News, more than 200 area restaurants used the service.
- In an email to several Buffalo restaurant owners, the company said it will focus on building its business and brand in its home country of Canada and will transition its U.S. partners to Grubhub.
- Just Eat acquired SkipTheDishes in 2016. In addition to operating in Buffalo, the company also had a presence in Ohio, Missouri and Nebraska.
Although competition in the U.S. delivery market is steep, there is still plenty of runway for such companies. Demand is growing and over half of QSR and fast casual customers surveyed by Tillster ordered online delivery between one and five times a month over the last 12 months. Companies have been expanding into new regions and building up market share as well.
DoorDash recently passed Grubhub for market share — 27.6% to 26.7% — while Uber Eats is close behind with 25.2%. Postmates has just over 12% of the share. After that, it's a bit of a free-for-all between plenty of smaller players such as Seamless, Delivery.com, Yelp Eat 24, Foodler, Gopuff and, until now, SkipTheDishes. But it's a hard place to be if you don't have the deep pockets and resources that the bigger players have, especially as some of them start to go public. Last year, smaller delivery companies began consolidating, with Reuters claiming that consumers tend to use only one app. In other words, it is getting harder to be a small fish in a growing pond.
Having a small scale may have been a hindrance for SkipTheDishes. The Buffalo News reports that Skip developed a negative reputation in that Buffalo market, stemming mostly from drivers showing up late. One restaurant owner told the publication that its customers blamed his establishments for the service issues. With a relatively small footprint, such reputational hiccups are hard to overcome.
The pullout from the U.S. market could also reflect a broader issue with U.K.-based parent company Just Eat, which started seeing its share value begin to dwindle about a year ago as rivals Deliveroo and Uber Eats turned up the heat in its biggest market.
In December, those issues came to a head when shares were down 26% on the year and activist investor Cat Rock Capital Management pushed the company to make faster decisions in an effort to turn things around. One of Cat Rock's requests was to consider the sale of its non-core assets. Although SkipTheDishes wasn't specifically called out (Brazilian startup iFood was), retrenching the service and focusing on its core market could benefit the company as it seeks solid footing. The company recently said its Canadian business through SkipTheDishes was growing rapidly after adding a bilingual service.
Cat Rock, however, continues to pile the pressure on Just Eat to merge with a delivery competitor. The company might be on a roll in Canada, but Cat Rock is looking for "world-class leadership" and believes a merger is the best route to take to achieve this objective. Cat Rock said the company's shares are up 35% since it first started to call for change in December.
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