I find this business model compelling because of its ability to simultaneously extract value from both sides of a co-dependent, two-sided market that is growing rapidly, at a highly profitable rate of 20% operating margins. Diners: GrubHub charges a small commission or ‘take rate’ to the consumer on a per transaction basis.Restaurant subs may choose their level of commission rate choosing a higher rate affects prioritization of a restaurant in Grub’s algorithm, generating higher page views similar to network businesses like AutoTrader.
Restaurants: Grub Hub does not charge its network any upfront or subscription fees, but instead only gets paid commission per order generated, providing restaurants with a low-risk, high-return solution.The Business Model: Grub extract’s a commission rate from both sides of their network when they enable a takeout/delivery order. With >5MM monthly active diners and >30,000 restaurants, GrubHub has built a vibrant two-sided marketplace within a domestic takeout industry processing $67bn of transactions annually.1įor context, GrubHub went public in April 2014 and is currently a $2bn market cap company at a revenue run-rate of $340MM/yr, growing 30%+ per year, with 20% operating margins. This is directed towards online food delivery service companies and other web platforms and applications that specialize in things like niche organic food delivery or accept Bitcoin as payment.GrubHub provides an online/mobile platform for restaurant pick-up and delivery orders. Industry reports show that $350m was invested in food technology in 2012, a 37% increase from the amount raised in 2011. Offices in New York, Chicago, Salt Lake City and London are set to remain open. This combined company's name is expected to be announced after regulators approve the merger.
Both companies are currently independent and privately held. The tech blog said rumors of a GrubHub initial public offering have been circulating since last fall, and this latest development does not necessarily pose a threat to that consideration. Tech Crunch on Friday reported on rumors that the companies would merge. In October 2011, the company acquired Menupages. Under Zablusky's leadership, Seamless underwent a significant rebrand and changed from SeamlessWeb to Seamless in July 2011. And though both companies have a regional focus, they each have expanded their brand focus into major US cities. GrubHub is based in Chicago and has a more dominant hold on the midwest, while Seamless has a defining grasp on New York, where the company is based.
GrubHub purchased the parent company of Campusfood and Allmenus in September 2011.
In five rounds of venture financing, the team acquired $84.1m in investment funding. Maloney co-founded GrubHub with chief operating officer Mike Evans in 2004. Maloney will serve as the new company's CEO, and Seamless chief executive Jonathhan Zabusky will be the company's president. "By combining our complementary restaurant and diner networks, we are well positioned for continued growth in a massive market." "GrubHub and Seamless share a common goal to generate more business for local takeout restaurants while providing the best possible service to diners," said Matt Maloney, the GrubHub co-founder and chief executive, in a statement. In a release, the long-time competitors said the merger presents an opportunity to expand the reach of their services, encourage quicker and more diversified product development and improve growth opportunities.
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