GrubHub Business Model and Revenue Model Explained

What is GrubHub?

GrubHub is an on demand food delivery platform delivering meals from restaurants to customers at their doorstep. The business model of GrubHub has not just made it easy for people to order food online from a variety of food joints in their city but has also helped restaurants serve a larger audience.

GrubHub is one of those startups which has achieved the ultimate goal of becoming an IPO. Founded by 2 developers in 2004, GrubHub acquired some well-known companies like Seamless. We at Jungleworks have compiled a success timeline of GrubHub below. But, before we move on to the timeline, here are few facts about GrubHub along with its salient features.

GrubHub Founders, Salient features & Facts:

Founders: Michael Evans & Matt Maloney.

Founded in: the Year 2004

Headquarters: Chicago, IL

GrubHub IPO Date: 7 April, 2014.

Publicly Listed: At New York Stock Exchange (NYSE) as GRUB

• GrubHub has 5.6 million active diners in last 12 months.
• GrubHub processes an average of 234,700 orders on a daily basis.
• Present in more than 900 locations across USA.
• It has partnerships with more than 35,000 restaurants.

Source: https://get.grubhub.com/

GrubHub owns and manages 4 different brands in the same industry. They are – GrubHub, Seamless, MenuPages and AllMenus.

GrubHub Funding Timeline

Value Propositions of GrubHub

GrubHub offers an excellent value proposition not just for customers but also for restaurants. Here are some values being offered by GrubHub to customers and restaurants.

For Customers:

• Helps customers save time and money as they can order food online.
• Customers can track the delivery after placing an order
• 24*7 Customer Service
• Users have an option to choose a restaurant from where they want to order.

For Restaurants

• GrubHub has its own delivery persons.
• GrubHub provides restaurants with an extended customer base.
• GrubHub provides restaurants a software to manage their deliveries through GrubHub in an efficient way.

Customer Segments

The fact is that everyone loves good food. And it feels even better when this good food comes to you at your doorstep. Hence the customer segments in GruHub Business Model can be defined as:

Users:

• People who love to eat out but have no time to go out.
• People who want food at their doorstep.
• Corporates who often order food from outside for their lunch.
• People who don’t want to cook for dinner.

Restaurants:

• Restaurants who do not have delivery guys to fulfil orders at home.
• Food joints who want to serve people at their location.
• Restaurants which want more customers and online branding.

GrubHub Business Model Canvas

In order to provide you with the exact business model of GrubHub, we decided to use Alex Osterwalder’s Business Model generation Canvas for GrubHub. Here’s the complete canvas with information about business proposition, key, partners, key resources, channels, cost structure, revenue streams etc.

Grubhub’s Revenue Generation Model:

Being an on-demand food delivery company, GrubHub is based on less ownership model as it does not own any restaurant. Still, it serves thousands of food orders to customers on a daily basis. Read on to know how much money does GrubHub make and its simple yet effective revenue model. The 2 major sources of revenue for GrubHub are:

• Commission on each order

GrubHub makes it possible for a customer to order food online from their favourite restaurant and also delivers it at their doorstep. As a company, GrubHub charges a commission percentage out of each and every order delivered.

The amount of commission ranges from 5% to 15% but according to an article on qz.com, it was revealed that GrubHub charges an average commission of 13.5%.

• Restaurant Advertising on GrubHub platform

Apart from the commission structure, GrubHub also has some sort of marketing and advertising plans for restaurants where they list that particular restaurant on the top for a limited time. Sometimes, the listing also depends on the commission structure such as to list a restaurant on the top, you’ll have to shell out more percentage for orders through GrubHub.

4 step model about how GrubHub Works

• Browse: Users browse various restaurants listed on GrubHub. GrubHub also has online menus for each restaurant. Features like search and nearby restaurants have also been provided for users.

• Place Order: Users have the ability to place their order online and make the required transaction.

• Restaurant prepares and packs the order: GrubHub receives the order and forwards it to respective restaurant with the help of technology. Upon receiving the order, restaurant prepares the meal and packs it for delivery.

• Delivered by GrubHub: A GrubHub delivery person picks up the order from respective restaurant and delivers it to the customer.

How & Why GrubHub became successful?

GrubHub was founded in 2004 and launched an IPO in year 2014. The success of GrubHub goes to its innovative business model and promising revenue generation strategy.

GrubHub started by listing restaurants on their platform and marketing themselves as a restaurant menu aggregator. However, the main features which made people regular customers on GrubHub include:

• GrubHub went on to list almost every restaurant in the city on its platform giving immense options to users.
• GrubHub lists discount coupons for some restaurants depending on their partnerships.
• GrubHub has an option where users can rate a restaurant. The rating helps others know the overall quality of the restaurant.
• GrubHub also tells the average price of food at each restaurant.
• It also lists the distance of restaurant from your location along with delivery fee (if any), minimum order and estimated wait time.
• Along with delivery, GrubHub also offered pick up option.

All these features have made GrubHub loved by users and have accounted for its success.

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