GrubHub is a bad buy, even with Amazon exiting food delivery, Jim Cramer says
. He conceded that delivery competition put a dent in second-quarter pizza sales before telling Cramer that investors are subsidizing low delivery prices to take unprofitable market share.
"We don't know how that's going to shake out once consumers actually have to pay the full cost of that delivery because those fees are quite substantial, relative to the cost of the underlying food," Allison said at the time. "I think we also have not yet seen what's going to happen with the supply of restaurants on these platforms as well."
On Friday's show, Cramer noted that the New York State Liquor Authority laid out new rules that could impact how GrubHub charges restaurants usage fees. GrubHub's pricing structure, while negotiable, can cost food partners about a 20% marketing commission, a 10% delivery commission and a 3% processing fee on each order, CNBCIf regulations are on the horizon, that may have an uncertain impact how delivery companies make money.
"Back in February, I told you to run, don't walk, away from GrubHub as well as all of its publicly-traded competitors," Cramer said. "Sometimes an industry will be booming, like this one, but there's no real good way to invest in it."WATCH: Cramer talks GrubHub's competitive woesWant to take a deep dive into Cramer's world? Hit him up!
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