Commerce

Grubhub has been expanding its offering in the Food Delivery and Restaurants space, as it goes for IPO

MEDICI

Technology advancement has been revolutionizing the overall consumer experience in the online ordering and restaurants industry over the last decade. This advancement has helped the large restaurant chains and small shops alike. Some of the technologies that have aided this evolution are Cloud, PaymentTech, Analytics and Mobility. Many Tech firms have utilized this opportunity to control a larger portion of the end-to-end value chain in restaurants and food services.

We can divide the evolution of commerce and payments in the restaurant industry into 4 phases:

The Pre- 2005 years: This was the age of exponential growth of popularity of internet. Firms that offered online reviews emerged in this phase. These review websites evolved as a single greatest source for restaurant discovery and selection. This was in addition to physical restaurant magazines. Desktop based POS were confined to the big chains and restaurants.

2005- 2010: In this phase, because of surge in Smartphone penetration in US, mobile apps became popular. This period saw emergence of multiple apps serving one or two steps in restaurant consumer experience. Yelp, Foodspotting and Urbanspoon emerged as alternatives for restaurant search.

2010-2013: During this period, restaurant services were increasingly being offered through mobile apps. Grubhub & Seamless offered menu/ordering for delivery through mobile apps. This period saw emergence of online coupons as a loyalty and rewards medium for restaurant in US. Starbucks adopted QR code based payment app in the initial period.

2014 & beyond: This phase will be marked by integration and expansion of tech firms to full blown restaurant tech providers. So far, we witnessed firms focusing on 1 or 2 processes of consumer’s experience. Going forward, we will see firms focusing on up-to 4 processes!

Restaurant Tech evolution pic

Grubhub’s expansion strategy including the acquisitions and merger, has helped it to have presence in the Discovery, Ordering/Menu digitization, Payments (App stores payment information so you only have to fiddle with all those numbers once) and Reward/loyalty section of consumer’s restaurant experience.

The inroads made by the company towards integrated solutions in the restaurant industry makes it one of the key players to watch out for apart from Opentable. It has taken strides to expand beyond one or two steps to a more significant part in the restaurant technology and payment space. The company completed a merger with Seamless in August 2013. GrubHub worked with more than 20,000 restaurants in the U.S, while Seamless had 12,000 partners in the country and in the UK. The combined organization enables diners and companies in more than 600 cities across the U.S. to order from more than 28,800 local takeout restaurants. In 2012, the online and mobile platforms of the two organizations sent approximately $875m in gross food sales to local takeout restaurants, resulting in combined revenue well in excess of $100m!

Grubhub acquired two companies since 2008 with a total disclosed value of $50m. The acquisition strengthens the company position as the category-defining leader in the industry. The main reason behind the acquisition was to Increase footprint and mobile development, and it enabled the company to have the largest restaurant listing in the country in over 50 major cities across the US.

Grubhub acquired Dotmenu and FanGo which provides a mobile platform that display online menus and enable ordering food for local communities across the country.

It is focusing on combining its presence in major metropolitan areas and smaller college towns, and this acquisition makes the company "head and shoulders the dominant player" in its industry

Besides, the company is also taking necessary steps to increase order size and frequency among current users, and inspire hunger among new users by launching new services and offerings for every user. 22% of GrubHub's revenue comes through mobile orders.

In February 2014, GrubHub Seamless filed an IPO to raise $100m. The common stock is expected to be listed on the NYSE under the symbol “GRUB”

About GrubHub Inc.

GrubHub Inc. provides online and mobile food ordering solutions. Its online and mobile ordering platform allows diners to order directly from various takeout restaurants in the US and London. GrubHub Inc. was formerly known as GrubHub Seamless Inc. and changed its name to GrubHub Inc. in February 2014. The Company process roughly 150,000 orders on a daily basis and is based in Chicago, US

MEDICI Team

MEDICI

MEDICI Team is a group of content writers, bloggers, journalists, researchers, and editors from the MEDICI team who collaborate to create FinTech insights.

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