Sundar Pichai’s sudden hankering for a piece of the online food-ordering business has Wall Street predicting major indigestion for the industry.
At first glance, the blue food-ordering tabs that have quietly popped up on Google’s search engine may seem like harmless competition for the growing array of apps that help people order food online.
But experts say the online search giant is only gearing up to siphon off traffic from food delivery companies like Grubhub and UberEats in the same way it has diverted traffic from online travel companies to Google Hotels.
Wedbush analyst Dan Ives predicts Uber may need to “significantly curtail” or “possibly shut down” its food ordering business in 2020 due to a combination of losses and “competitive headwinds,” like Google, he told The Post.
“Google has not had a significant impact to date on UberEats, but I think in 2020 it could,” Ives said. That will have investors fretting over UberEats’ losses, he explained.
“UberEats went from an asset to a liability for the company because it is unprofitable and Uber’s stock is down 30 percent since it went public,” Ives said.
Industry watchers also point to Grubhub as potentially vulnerable due to a sudden and mysterious decline in orders on its app that chief executive Matt Maloney revealed in October — sending the stock plummeting more than 40 percent.
Maloney blamed the decline, which he says became apparent in August, on discounts by rivals.
But industry-watchers say Google may have also played a role.
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“The only thing that changed during that time is that Google launched its platform,” said Chris Webb, chief executive of ChowNow, which provides online ordering software for restaurants and is a Google partner in the new business. “It’s pretty clear that Google is intercepting orders that would have gone to Grubhub and others.”
Google’s ability to wreak havoc on companies that act as online middlemen linking consumers to services is currently playing out in the online travel industry, where companies like TripAdvisor and Expedia have blamed Google for recent losses.
In November, TripAdvisor blamed Google “pushing its own hotel products” for its 12 percent drop in revenue, while Expedia Group’s CEO Mark Okerstrom warned of a “traffic shift” to Google Hotel and Google Flights this year. The company launched Google Hotel in March and has been ramping up Google Flights, which it added in 2011.
The company officially entered the food-ordering business in May with a service that lets people order food from partner companies like DoorDash, Postmates and Delivery.com without ever opening those apps. Consumers simply type in the name of a restaurant or style of cuisine in Google’s search engine or map, which leads to a results page with blue tabs on the top-right corner offering “order pickup” and “order delivery.”
Because Google doesn’t have food delivery capabilities, its partner companies carry out the orders.
Grubhub, which also owns Seamless, and UberEats are absent from Google’s list of delivery partners, which experts say may be part of a strategic decision to not share their valuable information with Google.
“UberEats and Grubhub realize this is not good for them long-term, that they’d be building a Frankenstein” if they shared their portfolio of restaurant customers with Google, said ChowNow’s Webb.
The partnerships can also cut into sales. Although Google maintains that it “does not currently have fees” associated with the new service, numerous sources tell The Post otherwise.
Google takes a slice of revenue from each transaction, Adam Price, chief executive of delivery app Waitr, told The Post following a meeting with Google reps about a potential partnership. Waitr, which focuses on smaller cities and suburban markets, ultimately declined to partner with Google, Price said.
Google also gets a 10-percent marketing fee for each transaction involving ChowNow eateries on its platform, a cost that is borne by the restaurants, according to ChowNow’s website. DoorDash, Postmates and other Google partners, by contrast, are sharing a percentage of their commissions with Google, according to several sources with knowledge of the arrangements.
Grubhub declined to comment on the tech giant’s potential impact on its sales, saying only that it “prefers to have a direct relationship with its 140,000 partner restaurants and millions of diners across the country.”
UberEats also declined to comment.
Even without Google, the industry is under siege due to regulatory crackdowns and an increasingly unhappy workforce.
Restaurant owners have also been speaking out against their delivery partners, arguing that the money they pay these middlemen — amounts of between 15 and 30 percent of each order — is unfairly eating into their already slim profit margins.