Take it from me, a bar owner: you never want to do take-out if you can avoid it. And delivery? It's a total sin, a dead weight loss, given that you can't even get a guest to buy a Corona while she waits for her food to go.
So, what do we make of that amazing 40% year-over-year revenue growth from GrubHub (GRUB) , then? What do we think about a company with daily average grub -- or DAG -- users up 21% year over year, producing $0.20 in profit, 78% growth vs. 2016?
I think it is a sign, once again, of a huge cultural sea change, one affirmed by that fabulous quarter from Domino's (DPZ) , with more than 10% comparable store sales on top of so many years of double-digit gains.
Now, ever since GrubHub came public in April 2014 at $26 a share and soared 31% that day, it's had its share of both promoters -- who thought that its business model would have an easy time scaling from city to city until the nation was covered -- and detractors, who could see no moat whatsoever to the food delivery business.
Currently, 21% of GrubHub's stock is sold short, and that's been pretty consistent even as the stock has soared from $17 back in January 2016 to $42 as of today.
Now, I have been impressed with the fact that GrubHub's got a fast mover advantage and that it has 50,000 restaurants and a scale that makes it so, as they said on the conference call, "Restaurants want to pay a higher commission rate in return for exposure to our platform."
But what I think is far more important is who is acceding to the GrubHub game: big-time chains, many of which are sacrificing their best gross margin item, booze, at the altar of customer convenience.
That's a giant admission that they aren't going to be able to get as many people in the seats anymore buying beer for too much money vs. what it can be bought for at the store -- the secret behind the success of so many dinner chain restaurants.
In fact, if you were on the somewhat downbeat Buffalo Wild Wings call last week, you would hear the company admit the world has changed. As the embattled CEO Sally Smith pointed out on the call: "Delivery is an addressable opportunity for Buffalo Wild Wings as more consumers are eating at home." That's fine, but the fact is, I don't know if Smith would be besieged by an activist if the behavior patterns hadn't changed. The idea of going out to watch a game with wings and beer -- as opposed to staying in and buying beer at the supermarket while taking out or having wings delivered by Wingstop -- is losing allure.
Now, there will always be people who want the experience of going out. Nevertheless, whether it is student debt or lower wages or a sense that you want to multi-task, check out Facebook (FB) , Snapchat (SNAP) or Twitter (TWTR) , while watching the game or looking at Netflix (NFLX) , or maybe all of those, the simple fact is that this change is accelerating, not arresting itself.
I can only imagine that with voice-activated devices like Alexa, it is only going to get worse.
Does that mean you should buy GrubHub? I think that the company's always going to be looked at askance. Even after the blowout quarter, the analysts were unrelenting about competition and upcoming seasonal weakness. More important, it's still one more sign of the times. And if all of those chains accede, then being at the top of GrubHub's list is going to be terrific for GRUB's bottom line, but a total admission that the older, more lucrative restaurant-bar model may have seen its high tide and then some.
That's something that's going to shake everyone, from the big chains to the real estate investment trusts landlords to the small and medium size businesses that would have never opened if they knew they could no longer count on the beer tap and mixed drinks to make their quarter.