Grubhub Enters Grocery Delivery With Instacart Partnership
The deal intensifies competition for market leaders DoorDash and Uber, leveraging Instacart's fulfillment network to challenge their dominance in the expanding US delivery sector.
The competitive landscape of U.S. food and grocery delivery was redrawn Tuesday as Grubhub, a subsidiary of Just Eat Takeaway.com, announced a strategic partnership with Instacart to enter the grocery market. The move positions the long-standing restaurant delivery platform to directly challenge sector leaders DoorDash (NASDAQ: DASH) and Uber (NYSE: UBER), which have been aggressively expanding their own grocery and retail offerings.
Under the terms of the new alliance, Grubhub will integrate Instacart's grocery and convenience store marketplace directly into its app. When a Grubhub user places an order, it will be fulfilled by Instacart's network of shoppers and drivers. This asset-light approach allows Grubhub to immediately tap into an established logistics network and compete in a market projected to reach nearly $300 billion in the U.S. this year.
The partnership represents a significant strategic shift for Grubhub, which has seen its market share in the restaurant delivery space erode over the past few years. While once a dominant force, Grubhub now holds approximately 16% of the market, according to recent industry data. In contrast, DoorDash commands a formidable lead with an estimated 56% to 67% market share, while Uber Eats maintains a solid second place at around 23%.
For Instacart (NASDAQ: CART), a grocery-delivery powerhouse with a market capitalization of over $10 billion, the deal provides access to Grubhub’s substantial customer base, potentially driving significant order volume. The company has been focused on expanding its platform services and enterprise solutions, and this partnership marks a major step in that direction.
The announcement places new pressure on DoorDash and Uber, which have invested heavily in building out their non-restaurant delivery segments. Both companies have leveraged their extensive logistics networks to offer delivery from grocery stores, convenience shops, and other retailers, a strategy that has been a key driver of recent growth. DoorDash, with a market cap exceeding $110 billion, and Uber, valued at nearly $196 billion, now face a reinvigorated competitor backed by Instacart’s specialized grocery infrastructure.
According to a press release, the service will begin rolling out immediately and is expected to be available nationwide by the end of the month. The collaboration is a clear attempt to create a more comprehensive delivery ecosystem, allowing customers to order both meals and groceries from a single app.
Investors will be closely watching how this alliance impacts customer acquisition costs and market share dynamics in the fiercely competitive delivery sector. While DoorDash and Uber have a significant head start and established multi-vertical marketplaces, the combination of Grubhub's brand recognition in restaurant delivery and Instacart's deep roots in grocery presents a potent new challenge.