Businessmodel of GrubHub

Customer Segments

According to the GrubHub’s own information, it serves around 7 million active diners – categorised as users that have placed an order in the last 12 months – and processes more than 267,000 daily orders.

The GrubHub ordering and delivery platform is targeted at consumers that either do not have the time, capability or inclination to cook for themselves, and caters to those that want to have food delivered to their doorstep on demand. The service allows users to order food from local restaurants, rather than from large, established chains that operate their own delivery service.

GrubHub also provides its services to companies, offering corporate accounts through its sister brand Seamless. GrubHub’s service is currently available only to users across the US, where GrubHub serves more than 1,000 towns and cities, as well as in London, UK.

Value Propositions

GrubHub’s principal value to consumers is the accessibility, efficiency and breadth of its delivery platform. GrubHub enables users to order food from home or on the go, offering a wide choice of local restaurants and international cuisines, with its network including a number of restaurants that would not otherwise process delivery orders. The GrubHub platform also allows users to track their orders in real time, with customer support available on a 24-hour basis for customers that experience issues.

GrubHub also provides value to its restaurant partners, increasing their visibility and marketing reach through its online platform and enabling small businesses to complete online orders. The Company’s delivery partners are also able to earn a reasonable wage on a flexible, part-time basis, working as and when they wish.

Channels

The GrubHub platform can be accessed via the Company’s mobile and desktop websites at www.grubhub.com, or through its iOS and Android mobile apps. According to the Company’s own information approximately 60% of GrubHub orders are placed through mobile channels.

Customer Relationships

The GrubHub platform is available to consumers on a self-service basis. Customers are able to register an account, browse menus and place orders without any direct interaction with GrubHub, all via the Company’s website and mobile apps.

Delivery partners are able to apply to join the GrubHub fleet through an online form, while restaurants are required to call the Company directly in order to join the Company’s network.

GrubHub offers 24-hour customer support services and provides FAQs and information for customers on its website. It also connects with its customers and partners via its Facebook, Twitter, Instagram and YouTube accounts.

Key Activities

GrubHub develops and operates an online and mobile platform for restaurant pick-up and delivery orders. The Company’s platform allows users to place orders from a range of local restaurants and track their orders in real time.

It also provides a re-order service that allows customers to place repeat orders from their favourite restaurants.

Additionally, GrubHub manages a network of restaurant partners, with which it negotiates variable commission rates, and independent delivery partners.

Key Partners

GrubHub’s key partners are its network of restaurants across the US and London and its team of independent delivery partners. The Company includes around 44,000 restaurants in its delivery network, primarily comprising smaller, local businesses that do not have their own delivery service or online ordering system.

Where the Company’s competitors have put a greater emphasis on major cities, GrubHub has sought to partner with restaurants across many of the US’ smaller cities and towns, such as Dynasty Restaurant in Agawam, Massachusetts and A2Z Deli in Ashburn, Virginia.

GrubHub also collaborates with a fleet of independent delivery partners, who can be anyone that fulfils the Company’s criteria of having a reliable vehicle, clean driving record, car insurance and valid driver’s licence.

Key Resources

GrubHub’s key resources are its online delivery platform, its IT infrastructure, its network of delivery and restaurant partners, and its personnel.

The Company’s customer support personnel are particularly important, allowing customers to access customer assistant 24-hours a day and seven days a week.

GrubHub is recorded as the applicant in one patent application held by the US Patent and Trademark Office entitled ‘System, method and apparatus for managing made-to-order food tickets for a restaurant service’. It is also named as the assignee in two further applications for ‘Utility for determining competitive restaurants’ and ‘Utility for creating heatmaps for the study of competitive advantage in the restaurant marketplace’.

Cost Structure

GrubHub incurs costs through the development of its online platform, the maintenance of its IT infrastructure, and the retention of its full-time personnel.

While the Company does not have to own and operate its own fleet of delivery vehicles, GrubHub does pay its independent delivery partners an hourly salary.

The Company also operates offices in Chicago, New York and London, accruing rental and utility costs.

Revenue Streams

GrubHub generates revenue by collecting commissions on every order made through its platform. The Company has a variable commission rate, allowing its partners to choose their own rate of commission at or above GrubHub’s base rate.

The average commission is reported to be around 13.5%. Restaurants are incentivised to pay higher rates, however, as those offering larger commissions are generally placed higher in GrubHub’s search order than those with lower rates.

In 2015 GrubHub drove $2.4 billion in gross food sales across the US and London, generating $361.8 million in annual revenue, an increase of 43% on the previous year.