Grubhub Business Model and Growth Strategy

In 2013, GrubHub sent more than $1 billion in gross food sales to local takeout restaurants. Their services are rather simple: provide delivery services for restaurants that don’t normally have delivery services. With over 700 cities included, this company uses a transactional model for their business. When a customer places an order through GrubHub, this company takes an average of 13.5% of the order as a fee for services. Then they will pick up the food and deliver it to the customer who ordered it.

The concept is working. GrubHub process more than 170,000 orders every day. Over the course of a year, more than 4 million unique users will place at least one order.

How Does GrubHub Work?

Visitors will go to the free site or access the menu options for their local restaurants through mobile apps. Diners can then choose whether they wish to have their food delivered or if they want to pick it up. The apps and site allow the diners to pay cash for the delivery, in advance with a credit card, or through the use of their Paypal account.

What makes GrubHub so unique is that the helpful features aren’t just intended for the diners who are using the products of this company. To streamline the ordering process, the GrubHub business model has incorporated some unique features that have helped those who create and deliver the food that is ordered to be more efficient as well.

  • OrderHub was introduced in May 2012 so that order confirmations could be streamlined at the restaurant itself.
  • Track Your Grub was introduced in late 2012 to help users receive order mapping and real-time notifications of their orders.
  • Driver apps have also been introduced so that delivery routes can be as efficient as possible.

The evolution of the GrubHub business model has shown that being transactional in nature doesn’t have to make you one-dimensional.

GrubHub Also Offers a Number of Complimentary Services

There are a number of ways that customers can take advantage of the meal ordering aspects of GrubHub. This has allowed this organization to expand upon its presence within the food industry while still being able to serve the specific needs of each market segment. Much of this expansion occurred in 2013 when Seamless and GrubHub merged together to add a corporate component to the business model.

Corporate customers have the option to order in one of three different ways.

1. Individual orders.
Businesses may pay or subsidize employee meals. This type of order can be linked to a corporate account so that money transfers from business to employee to restaurant can be streamlined and wasteful spending can be eliminate.

2. Group orders.
This feature lets a group of employees be able to order meals for their department or company as a whole. Individual meals can be ordered and they will come separately labeled.

3. Catering.
There are many restaurants that offer catering services through this site or app so that corporate orders can be easily fulfilled. Options can be immediately viewed and approved in a fraction of the time catering orders traditionally take.

GrubHub also offers a number of restaurant menus that can be easily accessed at home. Between their own database and that of Seamless, there were more than 250,000 restaurant menus that are available and this number continues to grow. This makes the ordering experience faster for everyone and allows restaurants to turn tables over faster because the decisions can be made at home.

In total, more than $100 million in venture capital between GrubHub and Seamless has been raised to bring this merged organization to what it has become today.

What Makes GrubHub Stand Out From the Competition?

The transactional business model of GrubHub is far from unique. It’s used in many different industries right now. What makes this company stand out from the rest of the competition is a unique idea. By providing a delivery service that allows people to have restaurant quality food at home with the ease of ordering a pizza, they can have a night out without having to actually go out to enjoy it.

What can we learn from the GrubHub business model? That with one good idea and the right level of funding, a successful business can be formed. Take these lessons learned, apply them to your business today, and you may just find more profits headed your way in the future.

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