Research Update: Grubhub Inc. Downgraded To 'B-' On Expected Cash Flow Deficits; Outlook Negative

We expect U.S. food delivery company Grubhub Inc. and parent Just Eat Takeaway.com's (JET) profitability will continue to be impaired by regional commission fee caps and elevated investment spending as the company seeks market share gains. We expect both Grubhub and its parent will generate EBITDA deficits in 2022, in line with JET's public guidance, and we believe it is unlikely these trends will significantly improve over the next 12 months. We lowered our issuer credit rating on Grubhub to 'B-'from 'B' and our issue-level rating on the company's $500 million senior unsecured notes to 'B' from 'BB-'. We removed all ratings from CreditWatch with negative implications, where we placed them on March 26, 2020. Our negative outlook reflects the

...- We expect U.S. food delivery company Grubhub Inc. and parent Just Eat Takeaway.com's (JET) profitability will continue to be impaired by regional commission fee caps and elevated investment spending as the company seeks market share gains. - We expect both Grubhub and its parent will generate EBITDA deficits in 2022, in line with JET's public guidance, and we believe it is unlikely these trends will significantly improve over the next 12 months. - We lowered our issuer credit rating on Grubhub to 'B-'from 'B' and our issue-level rating on the company's $500 million senior unsecured notes to 'B' from '##-'. We removed all ratings from CreditWatch with negative implications, where we placed them on March 26, 2020. - Our negative outlook reflects the risk that Grubhub has no credible path to positive free operating cash flow (FOCF) generation and that JET may become unwilling or unable to provide financial support to cover Grubhub's material cash flow deficits if they persist beyond 2022....

Research Update