Grubhub is pulling back on 2020 profit expectations as it responds to challenges imposed by the coronavirus crisis and invests more into supporting its restaurant partners.
The Chicago-based food delivery company announced Monday that it aims to generate $5 million in adjusted earnings before interest, tax, depreciation and amortization in the second quarter of 2020, causing it to likely fall short of a previously announced commitment to generate $100 million in 2020 earnings. Grubhub will release its Q1 earnings May 6.
The company expects profits to lag compared to original projections because Grubhub saw orders decline significantly in New York City, more than in other metro areas due to the severity of the COVID-19 outbreak in New York. However, in other markets that haven’t experienced such an extreme COVID-19 outbreak, diner ordering has returned to, and in some cases, exceeded pre-COVID-19 expectations, the company said. Grubhub said it is also seeing “record numbers” of new diners and new restaurants using the platform.
Additionally, the company saw a decrease in orders across its corporate business sector. With many offices closing and employees working from home, those orders have slowed considerably.
“While the business was trending at or above the high end of our guidance range for the first 10 weeks of the quarter, like most businesses, we experienced a swift change in customer behavior in the middle of March when the pandemic took hold across the country,” Grubhub said in a statement.
The company, which employs about 2,800 people, said it is also pulling back on 2020 profit expectations because it is giving more resources to the restaurant industry, such as promotions and reduced or eliminated delivery fees.
“In this difficult and uncertain environment, we believe Grubhub has a clear responsibility to help restaurants and all working individuals in our ecosystem,” the company said. “We further believe the absolute best way we can support our industry is by driving as much demand as possible to local restaurants, which in turn has significant downstream benefits for restaurant workers, restaurant suppliers, our drivers and countless others in the value chain.”
