The completion of the merger of Seamless and GrubHub was recently announced, and the combined organization will be known as GrubHub Seamless. Since the merger began, both food delivery companies expressed optimism for the benefits their combined technology and network of restaurants will bring. However, the new company will continue to operate as separate brands, despite its new name. It was very quick, but the new GrubHub Seamless president Jonathan Zabusky referred to the company in an interview as a portfolio of brands.
Companies that enter into mergers and acquisitions often focus on the technical and financial aspects of the merger, while brand is considered after the fact. But the strategy that guides a union of brands can make or break a merger. Poorly advised or hasty integrations can destroy what made either brand valuable in the first place. Brand-driven decisions can help the new organization deliver lasting value.
Several considerations may be underpinning GrubHub Seamless’ strategy to go forward as two brands:
- A portfolio of brands can better serve distinct audiences and customer segments, such as residential diners and corporate accounts. Each brand also may have stronger affinity in certain geographic markets that might be compromised by merging the two. As Interbrand’s Darcy Newell wrote in her previous analysis of the merger, “If, in coming together, they try to be everything to all people, the new consolidated brand might lose its way, failing to be something special to anyone.”
- Keeping the brands separate can help the organization extend into new categories that a merged brand may not have permission to enter. While one brand may have solid associations with food, the other may be more of a vessel to extend to other services and categories. The way in which Seamless and GrubHub have expressed brand voice is an important determinant of that ability.
- Merging two cultures can be extremely difficult. Preserving the cultures of both companies can reduce friction and maintain amicable working environments for employees.
These issues not withstanding, there are also compelling reasons to integrate the two brands in the future:
- Only having to support one brand can lower overall marketing spend, as well as facilitate a clearer and more consistent message to the market.
- A company’s brand portfolio doesn’t have to reflect the company’s internal structure, but it does have implications for how customers interact with its offerings. GrubHub Seamless may be better able to deliver an integrated experience for their users and network of restaurants with one brand instead of two.
- The combined brand could more effectively stave off competition, provided that the equity is transitioned and managed appropriately. The merger has already prompted competitive action with Yelp’s partnership with Eat24 and Delivery.com.
- Merging the brands and their names could signal unity to internal stakeholders and potential investors, as well as a shared vision and value set.
The degree to which these considerations will apply to other merging companies will vary. But in all cases, the brand of the new company should have a strong strategic foundation that is rooted in the realities of the market. It will be interesting to watch how this company evolves.
Alex Foss is an Associate Consultant, Brand Strategy at Interbrand San Francisco.