You are what you eat — that’s what they say, at least. But the novel coronavirus has radically altered how we eat since dining at restaurants isn’t possible nowadays. This new normal directs our attention toward food delivery stocks.
One person’s problem is another person’s opportunity, and the food delivery business has garnered attention as a result of the social distancing craze. This trend has accelerated as more than 50% of U.S. states now have lockdown measures in place.
Amid a burgeoning industry of app-driven traveling food purveyors, a handful of potential leaders have emerged:
Surely there must be some delicious investing opportunities here, right? Of course there are, so let’s partake in a three-course meal of the best food delivery stocks on the market today.
An early entrant into the food delivery space, GrubHub provides smartphone users with access to over 300,000 restaurants. This company was already gaining traction in the delivery market prior to the pandemic. Unfortunately for longtime GRUB stock investors, the share price peaked in September of 2018.
The pickup in food delivery demand, however, offers hope for a turnaround in all food delivery stocks. In fact, 2020 has the makings of a comeback year for GrubHub. The most recent financial results, posted in February, paint a positive fiscal picture for the company.
Grubhub Founder and CEO Matt Maloney pulled out some impressive stats during the company’s quarterly report:
We strengthened both sides of our marketplace during the fourth quarter, adding 1.4 million active diners and more than doubling our restaurant selection from just a quarter ago… We added more than 15,000 partnered and over 150,000 non-partnered restaurant options for our diners and we also launched a number of new loyalty programs for our restaurant partners.
Not too shabby. And the timing happened to be ideal as the coronavirus crisis was unfortunately right around the corner. With so many connections to dining establishments, GrubHub is successfully marking its territory in a profoundly lucrative market.
For years, investors thought of Uber stock as a way to bet on the emerging ride-share industry. That’s still true today, but there’s more to the story. The company was sufficiently forward-thinking enough to get an early foothold into the food delivery business when it launched the Uber Eats app in 2016.
In early February, CEO Dara Khosrowshahi suggested that Uber Eats could deliver around $10 billion worth of food in 2020. That would represent a sharp increase over the $6 billion-plus delivered by the company last year according to estimates.
Uber’s cut is 30% plus a delivery fee in its food delivery transactions. It’s a great business model since Uber already had widespread brand-name recognition from the company’s success in the ride-hailing market. Uber’s threat to GrubHub’s market share should be taken seriously as the competition intensifies amid the coronavirus pandemic.
Much smaller than GrubHub and Uber Eats, Waitr is nonetheless making its mark on the food delivery industry. What’s exciting about WTRH stock is that it has plenty of room to grow as it’s an undiscovered gem, comparatively speaking.
Granted, food delivery is a tough market as it’s highly competitive. Nonetheless, Waitr CEO Carl Grimstad proudly announced a significant recent milestone for the company:
We are pleased to announce that Waitr realized its first ever profitable month in February 2020, which we believe was an extraordinary result given the short period of time since we implemented our strategic initiatives.
It’s all about the baby steps, and Waitr could soon take some giant leaps forward as the food delivery market has been absolutely explosive lately. Moreover, Waitr’s financial results from 2020’s first quarter provide a snapshot of a company in growth mode. Quarterly revenues of roughly $44 million and adjusted EBITDA in the range of $3 million to $4 million suggests shareholders might not have to wait long for WTRH stock to deliver outsized returns.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.