Getting food delivered to your home is like having your own personal chef. Yet instead of having someone around to cook for you at all times, you actually have to put on pants, wait 30 minutes to an hour, and find your wallet.
Nonetheless, ordering delivery is a fast and convenient way to avoid cooking. These days, you don’t even have to call a restaurant if you want them to bring you food. You can simply open up your favorite app, browse through some menus, and you’ll be stuffing your face with tacos before you know it.
Ordering delivery also adds up. If the normal delivery transaction is $15 and your weekly grocery budget is $75, you’ve basically spent your budget on five meals. Sure, making food at home takes longer and doesn’t always come out how you hope, but it’s much friendlier to your wallet. By avoiding delivery or take-out altogether, you could save yourself hundreds of dollars each year.
Even if you do decide to stop ordering delivery, millions of people will still use delivery apps and spend billions on their food habit. That’s why you might want to think about taking the money you saved and investing in these delivery companies instead.
GrubHub is the most popular publicly traded delivery stock.
GrubHub ($GRUB) lets users search for nearby restaurants, browse their menus, and press a few buttons until food arrives at their door. The company, which also owns the ever-popular Seamless, makes money by taking a percentage from each transaction from the restaurant. In addition, GrubHub charges for sponsored restaurant search listings, while charging higher commissions from restaurants for placement on GrubHub’s non-sponsored search results. Essentially, GrubHub skims money off the top from a restaurant’s delivery business without having to actually make food or have their own delivery people.
GrubHub’s stock performed well over the last few months, and they’re up 19.3% since the beginning of the year. The company is experimenting with new services and ways to make money, like having their own delivery drivers and automating certain services. Until these launch in every city, the company will continue to make over $1 billion a year by doing what they do best.
Yelp has a GrubHub competitor, but it’s not as widely used.
Yelp ($YELP), the “digital Yellow Pages” used by millions to complain about local retailers, owns Eat24. Eat24 offers the same online-based delivery in the same way as GrubHub, albeit on a much smaller scale. Yet businesses in major cities like New York and San Francisco use Eat24 in conjunction with GrubHub so they can potentially attract as many customers as possible. Eat24 takes money from restaurants on a per-transaction basis, also like GrubHub.
Eat24 doesn’t make up the majority of Yelp’s business, but it’s starting to help a bit. Yelp sees it as a way to diversify their business past being a location listing service. It’s worth noting that though the company’s stock is up 67.57% in the last year, $YELP is down by over 9% since the beginning of 2017.
Several international delivery companies also trade on the stock market.
Baidu ($BIDU), a Chinese web services company, operates delivery service Waimai throughout their home territory. The UK’s Just Eat ($JE) operates a service of the same name and Menulog in England, Australia, and New Zealand. India-based delivery companies like Zomato and Hello Curry operate in their native country and elsewhere, but have yet to go public.
Should you invest in delivery companies?
Yelp and Baidu aren’t exclusively delivery companies, and rely on income from other products and services in addition to simply delivering food. GrubHub, on the other hand, offers food delivery services and nothing more. The company is also growing pretty quickly and recently beat analysts’ predictions during their latest earnings call. If you think services like GrubHub, Seamless, and Eat24 will continuously be in demand, consider doing your research into these companies before you think about buying their stock. If you think the push-button food delivery trend will die down over time, you might want to put your money elsewhere.