Analysts Forecast a Coronavirus Windfall for Grubhub, But This Isn’t China
With COVID-19 coronavirus reaching pandemic proportions around the globe, the restaurant business is feeling the pinch of lessened traffic, especially in China -- raising the possibility that food delivery services like Grubhub (NYSE: GRUB) could cash in. At least one analyst at a prominent firm went out on a limb Monday, predicting that the troubled culinary courier could potentially earn significantly from the outbreak. China provides a partial example of possible effects on the delivery industry, but key differences between China and the USA could lead to different outcomes, too.
Upgrading Grubhub from an "underperform" to a "market perform" rating on the basis of the coronavirus outbreak highlights a seldom-considered side effect from COVID-19's spread. That's the possibility of bullish effects for delivery services even as the rest of the market reels. The theory goes that if people stay home, avoiding crowded restaurants where they'll sit for hours in close proximity to potentially infectious fellow diners, some restaurant food demand will transfer to off-premise sales.
The changing pattern of in-restaurant dining versus delivery in China during the coronavirus emergency supports this idea to a degree. Meituan, China's premier food delivery service, reported quadrupled delivery orders in early 2020, with 80% of customers requesting contactless delivery to minimize exposure to the driver. The outbreak also increased the number of multiple-person households ordering food delivery during the period, an anomaly for China, where usually only one-person households make use of a food courier, according to Meituan.
Source Fool.com
