How does Grubhub make money? | Complete business model

 

How does Grubhub make money? | Complete business model

 

When we talk about ordering food from online apps, there is one name that comes to the mouth of many and that is GrubHub. Grubhub is one of the world's leading online and mobile food ordering and delivery marketplaces. It has the largest and most comprehensive network of partner restaurants.

 

Just like other food delivery apps, GrubHub makes money from the fees they charge member restaurants to provide them with digital existence.

 

In this read, I'll walk you through how GrubHub makes money in detail, along with a review of its complete business model. But before that, let's take an overview of the online food delivery industry.

 

The online food delivery industry is an industry that has grown rapidly over the past decade.

 

The food industry has a global turnover of 122.740 billion dollars, a growth rate of 7.5% with nearly 1.1 billion users worldwide. Additionally, a compound annual growth rate of approximately 32% is projected by 2022.

 

Interesting, right?

 

These numbers reveal how the industry is growing in the face of the ever-increasing popularity of online food ordering.

 

Now back to online food delivery giant GrubHub, here's what to expect:

 

About GrubHub

 

Founded in 2004 by Mike Evans, Roman Gaskill and Matt Maloney, Grubhub is an online and mobile platform for restaurant pickup and delivery orders. Since its inception, Grubhub's mission has been to connect hungry diners with great local restaurants.

 

At the time of writing this report, Grubhub has over 300,000 restaurants and is proud to partner with over 4,000 of these restaurants in over 225,000 US cities.

 

Here are some other interesting stats about the Grubhub company:

 

Provided nearly $6 billion in gross food sales to local takeout restaurants in 2019.

Processes over 647,000 daily orders.

Serves nearly 28 million active diners.

Sent over $3 billion in tips to drivers.

 

It has also merged and formed lasting partnerships with renowned brands. Let's look at its brand portfolio.

 

Grubhub brand portfolio

 

In 2013, Grubhub merged with Seamless, another popular online food delivery company founded in 1999. This in turn gave huge mileage to the company.

 

In 2014, Grubhub Seamless went public and began trading on the New York Stock Exchange under the ticker GRUB

 

Since then, Grubhub has been able to grow significantly following the merger with Seamless and aggressive acquisitions of other brands.

 

Here is the Grubhub brand portfolio:

 

Grubhub

Seamless

levelup

All Menus

Menu pages

 

How does GrubHub work?

 

The GrubHub app is quite easy to use. So, if you are used to ordering food online through other platforms, using it won't be a big deal for you.

 

Plus, whether you're picking up your food or having it delivered, you can learn how to use it for the first time.

 

Here are four (4) simple steps with which you learn how GrubHub makes money.

 

Join

Browse and place an order

food preparation

Delivery/Collection

#1 Register

 

First, you need to create an account. You must enter your first and last name, your email and a password that is specific to you. You can also use your Facebook or Google account to create your profile. Remember to add your current location when creating your profile.

 

#2 Browse and place an order

 

To place your desired order, browse nearby options, explore restaurant options, or browse the menu. Then make your selection.

 

#3 Food preparation

 

Once your order is placed, you will get an estimate of how long it will take for your food to be prepared and the minutes remaining for delivery.

 

#4 Delivery/Collection

 

If you placed a delivery order, your food will be packaged and delivered by the designated executive.

 

However, instead of waiting for your food to be delivered, you can pick it up directly from the restaurant.

 

The GrubHub Value Proposition

 

GrubHub is a two-sided platform that delivers value to two key partners – restaurants and diners . And as such, the company is focused on creating value for restaurants and diners through its takeout market.

 

Going forward, however, the value and ability to grow its business depends on Grubhub's ability to continue to deliver a compelling value proposition to these two key partners.

 

This proposal explains in detail how it creates value for its partners as well as for its customers. It also helps brand customers and customers identify with the brand.

 

It is simply a two-way communication process where the brand promises that value (benefits) will be delivered with the expectation that the same value will be experienced by the customer.

 

So to better understand this aspect of GrubHub's business plan, let's look at the different value propositions for restaurants and diners.

 

Value proposition for restaurants

 

Basically, Grubhub provides restaurants with more orders, helps them serve diners better, facilitates delivery logistics in many markets, and allows them to improve the efficiency of their takeout business.

 

In fact, restaurants here are generating higher-margin take-out orders at full menu prices.

 

Here are the key benefits that Value Proposition restaurants enjoy:

 

More orders: Thanks to Grubhub, network restaurants receive more orders at full menu prices.

Targeted Reach: Restaurants here gain an online and mobile presence with the ability to reach their most valuable target audience (i.e. hungry diners in their area).

Low risk, high return: Grubhub generates higher margin takeout orders for its restaurant partners by allowing them to leverage their existing fixed costs.

Efficiency: They can receive and manage a greater volume of take-out orders with greater precision, increasing their operational efficiency while providing their diners with a high-quality experience.

Insights: Restaurant partners get actionable insights based on the massive amount of order data Grubhub collects, helping them optimize their delivery footprints, menus, prices, and online profiles.

Delivery: GrubHub provides its own delivery services. So restaurants here focus on preparing great food while Grubhub handles the complexity of operating delivery networks.

Value proposition for diners

 

For diners, Grubhub makes takeout accessible, simple and enjoyable, allowing them to discover new restaurants and place their orders accurately and easily anytime and from anywhere.

 

Grubhub's value proposition offers diners the following key benefits:

 

Discovery: Grubhub connects diners to a wide range of restaurants from where they can browse menus and offerings.

Convenience: By using Grubhub, diners don't need to place their orders over the phone. Grubhub provides diners with an easy to use, intuitive and personalized platform that makes ordering from any connected device simple.

Control and transparency: Grubhub allows diners to have a “direct line” into the kitchen, without having to speak to a distracted order taker in an already error-prone process.

Customer Service: For diners, Grubhub's role is similar to that of a waiter in a restaurant, providing a critical layer of customer service that is typically lacking in takeout.

How does Grubhub make money? | The GrubHub business model

 

Grubhub has an interesting business model because it lets you know how it makes money. Most of its revenue comes from the Grubhub app release.

 

The company makes money by charging restaurants a commission per order, which is mostly percentage-based. It also generates revenue when a diner places an order with the app.

 

In the case of restaurants, they can choose their level of commission rate, equal to or higher than the base rate. Higher commission gives restaurants better connectivity with diners on the platform.

 

In some markets, Grubhub provides delivery services to restaurants on its platform. Turning now to its delivery charges, GrubHub charges diners an additional fee on the food ordered. Even restaurants pay delivery costs.

 

Grubhub Growth Strategy

 

The company is striving to make Grubhub an integral part of the daily lives of restaurants and diners through the following growth strategies:

 

Developing the takeaway market

 

GrubHub intends to continue to grow the number of independent and national and regional restaurant chains on its platform, in existing and new geographic markets, providing them with the opportunity to generate more take-out orders and offering delivery services.

 

Additionally, he intends to continue to grow the number of diners and orders placed on the platform primarily through word of mouth referrals and marketing that encourages adoption of the ordering platform. of the company and increased order frequency.

 

Improve the platform

 

GrubHub plans to continue investing in its websites, mobile products and independent delivery network, developing new products and better leveraging the large amount of order data the company collects.

 

Provide excellent customer service

 

Grubhub seeks to build loyalty and support the platform by meeting and exceeding restaurant and diner expectations through customer service.

 

Pursue strategic acquisitions and partnerships

 

The Company intends to explore new opportunities for expansion in existing and new markets, as well as core and adjacent categories through acquisitions and strategic partnerships that help accelerate the growth of the meals market to take away.