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On Demand Businesses 101

Getting Grubhub-ed: Taco Bell and KFC

ON DEMAND FOOD ECONOMY

The rise of on demand offerings is transforming the way people live and how they consume products and services. The on demand food economy has also disrupted the traditional market by building on ‘convenience‘. These food startups help to save time and put in less effort, which of course is appealing. The on demand economy focuses on the ‘Psychology of Convenience’-

  1. Decision Convenience – Making it fast and easy to choose
  2. Access Convenience – Making it fast and easy to acquire
  3. Transaction Convenience – Making it fast and easy to pay
  4. Benefit Convenience – Making it fast and easy to enjoy/use
  5. Post-Benefit Convenience – Making it fast and easy to re-purchase

The appetite for on demand food delivery went up in 2016 and ever since, there has been no looking back. Startups such as GrubHub, Uber Eats, DoorDash, Caviar are becoming powerful gatekeepers in the dining industry. Most of them follow one of  these 3 models- The Order only Model, The Order and Delivery Model, and the Fully Integrated Model. Also, the enormous user data they’re able to collect is nothing short of priceless! They can track and predict consumer behavior and hence, provide their users with ‘experiences’ rather than just commodities.

On demand food delivery startups also rank second on the Investments in on demand businesses.

On Demand Investments

On Demand Investments

ABOUT GRUBHUB

Grubhub is an online and mobile food-ordering company that connects diners with local restaurants. The Chicago based company has nearly 10 million active diners, and approximately 75,000 restaurant partners in over 1,300 cities across the United States and the United Kingdom. Grubhub’s portfolio of brands includes OrderUp, Seamless, AllMenus, MenuPages, Restaurants on the Run, DiningIn, Delivered Dish, Eat24 and LAbite. Grubhub also makes the payment process seamless as diners who order through Grubhub’s website or mobile apps—for iOS and Android devices—can pay with cash, credit or PayPal. GrubHub has grown multifold in the recent years with the maximum market share of online food delivery sales in 2017. GrubHub filled an average of 300 orders every minute, according to Matt Maloney, CEO, Grubhub. Read more about Grubhub here!

On Demand Startup, GrubHub's market share of online food delivery sales, 2017

On Demand Startup, GrubHub’s market share of online food delivery sales, 2017

THE DEAL

If you’re a Taco Bell or KFC Fan, we have some great news for y’all!

Grubhub will now be responsible for delivering food from these big restaurant chains, right at your doorstep. Yum! Brands, the parent company of Taco Bell and KFC bought $200 million of Grubhub stock, and a Yum executive will be joining the Grubhub board in a deal sealing the partnership. This led to a 28% increase in  Grubhub’s stock.

The partnership is set to activate Grubhub in towns long overlooked by the on demand economy. “That’s exactly where we see a lot of growth opportunity,” says the CEO. In their joint release, Yum and GrubHub have agreed to joint marketing initiatives. According to Maloney, Yum will give GrubHub entrée into markets where the delivery service “has less awareness.”

“While GrubHub is the leading marketplace for takeout online, we have converted only a small portion of the U.S. population from the paper menu to online ordering,” Maloney said on the call. “By leveraging a joint national go-to-market strategy, we believe that we will access new parts of the demand funnel that we have not been able to reach before.”

Even though Taco Bell already offers delivery via DoorDash, Grubhub says that the humongous investment will help it to “further enhance the ordering and delivery experience for diners, restaurants and drivers,” as per the company’s press release.

Yum also gained itself access to GrubHub’s fast-growing customer base, which included 14.5 million active diners in the latest fiscal year, which would further help them build an audience for KFC and Taco Bell delivery.

Analysts at Stifel i.e. US’s largest Equity Research Platform agreed that the deal is a big win for GrubHub “and potentially a hit to its competitors in restaurant delivery” due to its exclusive nature.

HOW CAN WE HELP

If even an experienced delivery provider like Yum needs help with this, then you can bet almost every other restaurant chain will, too. Restaurants should not underestimate the intensity of this paradigm shift. Moreover, the increasing competition in the market is also forcing the startups to cut down their prices in order to battle it out. From traditional to digital, it’s the need of the hour.

A conventional business like yours needs to try to be innovative enough by building an interactive website and an app like Uber and we promise, it won’t be half as hard.

If your goal is to build the next big on-demand food app, then reach out to us at [email protected]. Leverage our technical expertise and experience to build a scalable on-demand Uber like App!

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