What happened

Shares of Grubhub (NYSE:GRUB) fluctuated last month as investors struggled to determine what kind of effect the coronavirus outbreak would have on its business. Early on, the market seemed to think that it could be a boon as more diners stayed home and ordered takeout, but investors later ran from the stock as the restaurant industry began to implode as it was forced stop eat-in service in response to stay-at-home orders across the country.

As a result, the stock finished the month down 15%, according to data from S&P Global Market Intelligence. The chart below shows how volatile the stock was over the course of the month.

^SPX Chart

^SPX data by YCharts

So what

Grubhub shares actually gained in the first week of March after the company expanded delivery service with Dunkin and got an upgrade from Oppenheimer from underperform to perform, as the research firm predicted that the coronavirus outbreak would provide a tailwind for Grubhub.

A person holding a smartphone with the Grubhub app open.

Image source: Grubhub.

However, the following week the stock crashed as the full force of the pandemic came into focus, with schools closing across the country and businesses telling workers to stay at home, effectively taking away lunch orders in commercial districts. Realizing that the entire restaurant industry was on the verge of a catastrophe, Grubhub said on March 13 that it would suspend fees for independent restaurants, helping to support eateries that can no longer host dine-in customers. By foregoing $100 million in commission fees in the interest of supporting the partners that supply 80% of its orders, Grubhub will rely instead on customers to pay for its service. While orders are likely increasing, revenue may not be as the company gives a break to its partner restaurants. 

Grubhub CEO Matt Maloney followed that up the next week with a letter to the Trump administration calling on it to support the $325 billion aid package proposal from the National Restaurant Association. 

Now what

Grubhub is in a better position than most restaurants since it doesn't need every restaurant to survive in order for its service to grow, but it does share in the crisis facing the industry. The company said on Friday that it would provide more than 100,000 restaurants with a $250 credit, spending $30 million to help them through this difficult time.

Grubhub was already facing challenges with competition and in other areas before the crisis, and these new headwinds will likely remain for several months as the restaurant industry isn't suddenly going to bounce back to full strength. Don't expect any fireworks from this stock.