Grubhub Acquired to be a Part of New Super App & Advertisers Back in on 'X'?

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Kyle Heggie. Today, the biggest restaurant company you've never heard of just bought Grubhub is Wonder, the next Chipotle.

0:41And New Yorkers, rejoice. Your days of paying broker fees are over. It's Thursday, November 14th. Let's ride.

0:53We are lucky to be joined by the great Kyle Hagee, the co-host of Morning Brew's other podcast, per my last email. Kyle, we've got to talk about the trend that is sweeping the globe, celebrity lookalike contests. So this started a few weeks ago when a Timothee Chalamet lookalike competition was held in New York City and went viral after the man himself showed up. Then these started popping up all over the place. A Paul Miskal lookalike competition in Dublin, Harry Styles in London, Dev Patel in San Francisco. This upcoming weekend will feature more, including a Jeremy Allen White lookalike competition in Chicago, of course.

1:30Kyle, help us explain what's going on here. Well, I think Timothy ruined it for everyone because he actually showed up. So now I think everyone's like, how do I get to know my favorite celebrity? I'll just do a lookalike contest and hope they show up. So Jeremy Allen White, you better get your butt to Chicago. Neil, I have a question for you. Yeah. The best celebrity lookalike competition that you would win, who is that for? I don't think I look like any celebrity, but I've been told that I look like a little bit like Mike from Suits. That's the only thing that has ever been mentioned to me in the realm of celebrity lookalikes.

2:02I don't even know what this guy looks like. I'm sure he's extremely handsome. Oh, super handsome. You might actually be a celebrity now. It probably counts. We should do a Neil Fryman lookalike competition like Washington Square Park. I would show up to that, but I would probably be the only person there. Now let's hear a word from our sponsor, Sage. Not the herb, but a tool that saves finance professionals a lot of time and money. Neil, I've heard from Toby that you're quite the cook. I've been known to break out the La Crusade every now and then. Oh, fancy, but also a perfect example of how Sage helps CFOs.

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3:41EBCLIS can be used with or without topical corticosteroids. Don't use if you're allergic to EBCLIS. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with EpGliss. Before starting EpGliss, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EpGliss and visit epgliss.lily.com or call 1-800-LILY-RX or 1-800-545-5979. For our first story, Wonder Group has agreed to acquire food delivery startup Grubhub for$650 million.

4:12While that sounds like a lot of money, it's a steep decline from Grubhub's $7.3 billion valuation in 2020. Now, it's called Wonder Group because you're probably wondering what it even is. Well, it's a quote, new kind of food hall that operates 25 fast casual restaurants around New York City and New Jersey. This is the brainchild of entrepreneur Mark Lurie. Lurie previously sold diapers.com. Yes, you heard that right. Diapers.com to Amazon for over$500 million and jet.com to Walmart for over$1 billion. The deal marks another expansion of Lurie's vision for Wonder Group, which he plans to have IPO ready by 2027 with a target valuation of$30 billion.

4:54And his quote was, quote, bringing Wonder and Grubhub together is the next step in our vision to create the super app for mealtime, re-envisioning the future of food delivery. Neil, before we get to Wonder, final thoughts on Grubhub? I feel like this is a fallen angel. It is a little bit. I mean, this was a terrible acquisition by Just Eat Takeaway. They paid$7.3 billion for Grubhub at the height of the COVID delivery boom. Now they sold it for 91 % less than that valuation. They really just kind of bought it at the top. Just looking at the market share of delivery apps in the United States right now, Grubhub has a market share of 8 % compared to 67 % with DoorDash, and Uber Eats now has a 23 % market share.

5:40So Just Eat bought Grubhub to get into the U.S. market, expand their European empire, and they are the biggest food delivery service in Europe. It did not work out as well. People started going back to restaurants, and the overall delivery market just hasn't grown as much as was expected. But now that we tied the bow on Grubhub, let's talk about Wonder, which bought Grubhub. What is your take on Wonder and what they're doing? I mean, it is a sensibly a startup that few people have heard of outside of maybe New York City of seeing these storefronts. But they have insane plans. I mean,$30 billion valuation is insane that if they do achieve that, that would be within 10 years.

6:20Chipotle had a$30 billion market cap after 30 years in business. Shake Shack is worth$5.5 billion right now. This company in its last wonder, in its last funding round, was valued at$5 billion. So clearly investors are betting on Mark Lurie. And you mentioned he had these incredible exits,$3.3 billion to Walmart by Jet.com. So it's very interesting what he's doing here and playing around in the restaurant space. Yeah, I mean, I think this is definitely a bet on the entrepreneur as much as it is the idea. And someone who's had this much success is Mark Lurie. It's probably a good check to give him more money and see what he does with it.

6:56Wonder, I'm actually one of the few people who maybe have gone to a Wonder. It's pretty differentiated. So it's not like a courier network like Uber Eats or Grubhub. It actually is this like casual dining experience where they cook most of their food off site and then they bring it on site to a wonder food hall and it can be prepared with very little tooling in about three to five minutes. But it actually tastes like it's made fresh. That's their differentiated piece. And they're trying to allow you as a family to come in and order from like four or five different restaurants all in one spot. Doesn't it?

7:30Kind of restaurant. Yeah. They have 35, I believe, of fast casual restaurants they operate. So it allows you to kind of pick and choose what you want instead of being relying on one restaurant or one menu. I think it's a pretty interesting idea, and it is different than what other players are doing in the space. Yeah, one other differentiating factor is they've partnered with celebrity chefs. So they have menus inspired by Bobby Flay and Marcus Samuelson, Jose Andres, and people like these. They've actually paid them to use their signature dishes to sell to people. and Mark Lurie wants to give customers a more elevated dining experience.

8:06But what he does really is the goal here is a super app for mealtime, which I think super app is just a buzzy word. I don't know exactly what it means. But now that he bought Grubhub, he wants to go from recipe development through the food preparation, through, you know, bought Grubhub's delivery drivers, through actually fulfillment to create this holistic experience for when you want food. They control everything. And he spent$60 million on IP alone to own particular brands that they're selling out of these spaces. So right now they have a few dozen locations in and around the Northeast. But he said he wants to expand to 100 locations by 2026 and then eventually IPO at a$30 billion valuation in 2027.

8:52Another interesting part of this super app is Meal Kits. You might have not heard this name in a while. Blue Apron. Oh, yeah. But but Wonder bought Blue Apron again for pennies on the dollar, just like they did Grubhub last year for one hundred million dollars. So now they do meal kits. They do these more elevated dining concepts with with celebrity chefs. So it's an interesting proposition. It's hard to pin down what exactly Wonder does, but they've raised one point seven billion dollars. Investors clearly think that Mark Lurie is on to something again. And he's poured in hundreds of millions of dollars of his own capital as well.

9:24He also had this quote where he said he's in fifth gear right now, and he hopes he doesn't have to go to sixth gear, but he will if he has to. This guy is pretty hardcore, so don't bet against Mark Lurie. Okay, it's been a wild post-election week for Elon Musk's ex. In bad news for its business, many users appear to be leaving the platform, but in better news, more advertisers might return. Let's start with the users who appear to be leaving at rates not seen since Musk took over the company two years ago. On Wednesday, the day after the election, 115 ,000 US users deleted their X accounts, which was the single biggest day of web account exits since SimilarWeb began tracking the figure.

10:03Many of them appear headed to BlueSky, the ex-rival that began as a project by Twitter founder Jack Dorsey in 2019. BlueSky said it has scored 1.25 million new signups in the past week alone, bringing its total user base to above 15 million, which is still very small compared to other platforms. But even as users flee, marketers could be coming back, which would be a huge help to X's sagging finances. The Financial Times reported that some brands that had left X once Musk took over and stripped its content moderation policies are considering making a return. The move would be a strategic, politically motivated one, marketing consultants said.

10:41Musk owns the platform. He figures to be an influential figure in the next administration. So if you want to get in his good graces and the good graces of the president, it helps to be an advertiser. Kyle, it's quite a contrast. Users going, advertisers maybe coming back. Yeah, not normally what you see. Normally those things go in the same direction. I mean, I think if I'm an advertiser, as you mentioned, Musk has the ear of this administration. It's probably not a bad bet to, like, keep him happy, throw some money at X. Unfortunately, they're still going to have to deliver results for their advertisers.

11:12I don't think a lot of advertisers are going to get bullied to spend money on the platform. They might just not make a big deal of leaving the platform. On the blue sky side, it's important to understand that these numbers are quite small. I think Threads has about 4 or 5x. 275 million. That's Meta's Threads. That number may be inflated because everyone knows who scrolls Instagram. You might see Threads pop up every now and again while you're scrolling. And then as soon as you click on that, you become, in effect, a Threads user. So it has 275 million compared to Blue Sky's 15 million. And what I think is we're seeing is like this more fragmented media where people are finding their niche.

11:48And it might be a different platform like Blue Sky or others where they are surrounded by the type of people they want to interact with. And as opposed to this like public town hall X everyone on it, I think media is getting more and more fragmented and more and more niche. So I don't think Blue Sky will get to a large number of users, but the users it has might actually really enjoy the platform. And let's talk about X's finances, because I mentioned they were not in a great place. So it really needs advertisers coming to come back. According to eMarketer, the company is going to bring in$1.9 billion in advertising revenue this year, which is down from$2 billion last year.

12:24And in 2021, before the takeover, it was doing$4.5 billion in revenue. So a pretty dramatic decline. Meanwhile, X's valuation has plummeted from$44 billion, which Musk paid, to below$10 billion. So it is a very important business imperative to get advertisers coming back to the platform. And it's a bet that paid off for Musk when he aligned with with President-elect Trump that it would be really good for a lot of his businesses, as we've talked about on the show. But we didn't talk about what it could mean for X. And it does seem like it might provide a tailwind for that business as well. Yeah, I think X is in a better spot than it was a year ago, almost undoubtedly.

13:03The one thing I will say is if you leave X for Blue Sky, please don't make a post about it. I can't see this big announcement. I'm leaving X. I'm going to blue sky. Just go to blue sky. Better yet, delete X and just go see some actual blue sky. Go outside, walk in a park. We don't need more social media. Let's move on to our next story. Brokers in New York are in shambles after the Fairness in Apartment Rental Expenses or FAIR Act recently passed in New York City with a vote of 42 to 8. The bill requires landlords who hire real estate agents to, breaking news, pay the agents fees themselves instead of passing them on to tenants.

13:39This might not sound like a big deal. Fees can add up to about 15 percent of annual rent on top of a security deposit. That's according to research from Street Easy, which said that upfront costs on average are twelve thousand nine hundred and fifty one dollars in New York City. So it's prohibitive for some people to even pay that upfront cost. The powerful Real Estate Board of New York and the industry's main lobbying arm has argued that if landlords are forced to absorb this cost, that ultimately they will increase rents and affect renters that way. I think the real winner of this is Chi Ase, the New York City council member who reintroduced this bill and has been sharing progress on social media.

14:19He called the broker fees, quote, a killer upfront cost that has hampered mobility for many renters, causing families seeking to grow to forego having kids and forcing children aging out of their parents' home to leave the city. Dude has been very electric on social media this past. It's a really big deal in New York City. And, you know, I think this means we can finally move in together. I'd love that. Yeah, this dude is 26 years old. He's already making waves in the New York City Council. This was you said brokers were in shambles, but they're still going to get paid. It just depends on by who.

14:48And right now in New York City is very unique. We have a lot of listeners from outside of New York City, and they're probably thinking right now, wait, the tenant has to pay the broker fee? That is not how we do it. New York City was certainly an outlier in this regard. It goes back decades to when brokers were the gatekeepers of the rental market. And now that has been disrupted by online platforms like Street Easy, which was a big proponent of this bill. They threw a lot of their weight behind it. But yeah, this this was very much an anachronism of New York City. What they just passed brings it in line with more of the national standard, which is that the person, the landlord who hires the broker to show their apartment pays them.

15:31And the tenant is relieved of some of these thousands of dollars of costs that were prohibited. You know, many people have to save a bunch of paychecks just for the upfront cost, for the opportunity to live in the apartment, not let alone rent that is among the highest in the world. The median rent for an apartment in New York City is$3 ,500 a month. So this is a big win for renters and tenants who had pushed for this for a long time. And I think this is an example of technology almost becoming the new middleman and pushing out brokers who traditionally probably had a really important role of showing people around New York, knowing the ins and outs.

16:06Street Easy Now does that. And so I think people are relying more on technologies than actual brokers. And because of that, there's been less support for them. And now we'll see what happens with this lobbying pass. But I think it's going to be a bad day to be a broker. Brokers are fine. But I think the landlords are now going to say, OK, I'm paying. So I need to make sure that the brokers are actually providing a lot of value. And right now, I don't think they are necessarily like the incentives are misaligned because the broker doesn't need to do anything. The tenants are still going to pay.

16:38So I think brokers are going to have to probably provide a lot more value to landlords than they are currently. And we should say that tenants and renters can hire their own broker and pay as well. It's just if you don't hire one, you don't need to pay under this new law. Yep. And up next, Toby's, who's not here, favorite segment of the week, Neal's numbers.

17:20in store.

17:29When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans, send event invites and pin messages so no one forgets mom's 60th, and never miss a meme or milestone, all protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will make your brain neurons light up like a neon sign in Vegas. My first number is$20, which is the most you'll pay for an item on Amazon's new storefront.

18:12Yesterday, Amazon launched its highly anticipated competitor to Taimu, Shein, and TikTok shop, the China-linked marketplaces that have surged in popularity by offering ultra-cheap clothing and accessories. Called Amazon Haul, Amazon Storefront can be found on its mobile app and hawks a variety of products across apparel, home goods, electronics, and more. You can get$1 eyelash curlers, an iPhone case for$3, and a four-pack of Christmas socks for$7. But those prices require a very un-Amazon-like compromise. The company says it'll take one to two weeks for your purchases to get delivered, and you'll be charged a shipping fee for orders under$25.

18:51Kyle, Amazon is clearly feeling the heat from these ultra-discounted online stores. Do you think this gives it a little breathing room? I mean, first, four-piece Christmas sock, add to cart immediately. I think this is a really smart move by Amazon to get into a new kind of area or market that they haven't necessarily been competing in. You mentioned, like, shipping costs, long deliveries. Like, that isn't the Amazon way, but they're pivoting to compete with these new players. And I just think you don't bet against Amazon. They already have a large base. They're going to be able to port users over to this.

19:20So I think it's a really smart idea for them. And one way they're trying to differentiate from Temu and Shein is by hyping up the quality of their products. These other, these China-linked marketplaces have been accused of shady practices for sourcing materials to build these goods or ripping off, you know, third-party sellers. and Amazon in their press release for Amazon Hall sort of touted the fact that they screen the products that sellers offer in this particular market price so customers can be confident. They're gonna receive safe, authentic, and products that are compliant with applicable regulations.

19:55So that's how they're standing out from the ultra discounters that exist. But clearly they're feeling the heat. They don't wanna be disrupted. And so this is their launch to stay ahead of the pack. For my second number, I need you to call your friend who you tease for being a terrible sports bettor. You owe them an apology. At least in this NFL season, amateur gamblers have been gaining the upper hand on sports books like DraftKings and FanDuel, forcing these companies to pay out more to customers and lower their sales forecasts as a result. Get this, last week, DraftKings slashed its 2024 revenue guidance by$250 million, and on Tuesday, FanDuel parent Flutter cut its annual US revenue forecast by$50 million.

20:38So what's going on? Isn't the number one rule of the casino, the house always wins? Well, not always. This NFL season, fan favorite picks like the Chiefs and the Lions have been winning a lot and generally there have been fewer upsets, which would be better for the sportsbooks. For example, FanDuel's worst day of the NFL season was on the second Sunday of October when 11 of the 13 favorites beat their opponents. To sum it up, the DraftKings CEO said, this was the most customer-friendly stretch of NFL sports outcomes we have ever seen. I love that they build these apps and these markets for the very intense gamblers who are going to calculate all the odds and over the long term the house will win.

21:19And then there's just a 58-year-old dude in Kansas City who's like, I just bet the Chiefs. And then the Chiefs win and DraftKings is like, there goes our whole business plan. I think over the long run they're going to be fine, but it is funny that these like basic kind of amateur gamblers are taking the house for its money. My final number is for anyone out there who thinks they would win the amazing race. Scandinavian Airlines or SAS is handing out 1 million frequent flyer points to anyone who flies and at least 15 airlines in the Sky Team Alliance by the end of the year. The promotion is worth more than$10 ,000 and is SAS's way of celebrating its entrance into the Alliance, which includes carriers like Delta, Air France, and KLM.

21:59So here's what you'll need. Excellent itinerary planning skills, a boss who lets you work remotely, and a passion for lower back pain. One guy who took up the challenge told the Wall Street Journal he plans to spend about 90 hours on airplanes across 20 different flights in the next two weeks to complete the challenge. Kyle, 1 million points,$10 ,000. Do you think you could pull this off? I definitely could pull it off. I love this story. I feel like they should be filming all of these people, like in turning it into an actual Amazing Race segment. And good luck to everyone that's participating.

22:30This is an absolutely electric story. Apparently, employees at the airlines are placing bets on how many people will complete this, ranging from five to 500. I would say probably more people than not. Like if there was an over-under, if DraftKings gave me the over-under, I would probably take the over on this. I think people are very wily. They're very clever. Apparently, travel forums are bursting with information about itineraries. They're lighting up with people trying to complete this. But it's, what is it, November 14th? You have until December 31st. So if you want to get a billion frequent flyer points on Scandinavian Airlines, then you might as well start now.

23:11This is the same group that, like, hacks credit card points, and you never bet against those people. No, I mean, you don't, and I love these people. I am one of them. OK, let's sprint to the finish with some final headlines. Lots of drama at Polymarket, the prediction betting platform that rose to prominence during the recent election. Yesterday, the FBI raided the Manhattan home of the founder and CEO of the site, 26-year-old Shane Copland, and seized his phone. We don't know yet what the agents were looking for or why they raided the home, but Polymarket was quick to call it politically motivated after its users accurately predicted the outcome of the election in favor of Donald Trump.