Food delivery app
Posted on: | Posted by: Rahul

How does Grubhub Work: Business Model & Revenue Model

The changes in the food habits of society can be understood from the evolution of the food industry. Rapid advances in technology have changed the way people react to new experiments in the market. It is quite visible in the way the food industry is inculcating new changes in the market. One of these changes has been in the way food used to be ordered and served or delivered. Fuelled by technology, there has been a drastic change in this very aspect, and with the advent of online food delivery platforms, the whole experience has changed. There has been a tremendous boom in this domain and it has become an industry in itself. As a result, online food delivery app have gained a lot of popularity and followers in a short time leading to intense competition and more and more players entering this market.

One such notable player that has been active in the online food delivery market is GrubHub. It is one of the oldest and largest food delivery businesses in North America in terms of revenue generated. So how exactly does such a business function and manage the challenges that come up on a day to day basis in such a dynamic and sensitive market space?

Let us delve deeper into the working of GrubHub starting with some information about the market that it operates in:

MARKET SIZE

The US food delivery market is anticipated to increase by 79% in the next 5 years.

Food ordering and delivery business is contemplated to enlarge by $30 billion (from $43 billion in 2017 to $76 billion in 2022) at an annual growth rate of 12% over the next five years

Not only Millenials, online ordering, and delivery is the preferred option among users in the age group of 45-55 as well.

The top five players in this sector have a cumulative valuation of $11.52 billion.

ABOUT GRUBHUB

GrubHub is an online food delivery platform that serves people by delivering the food from a place of their choosing and in the process also helping restaurants in increasing their revenues. GrubHub began its journey in 2004, with the aim to become one of the top-listed services.

Here are some salient facts and figures about GrubHub and its journey:

Ø GrubHub was founded by Michael Evans and Matt Maloney at the headquarters in Chicago.

Ø GrubHub has 5.6 million active customers with an average of delivering 234,700 orders per day.

Ø GrubHub has made its service available in more than 900 locations across the USA, partnering with more than 35,000 restaurants.

Ø GrubHub is one of those few start-ups that have gone public and it has been listed on the NYSE since 2014.

Ø GrubHub owns and operates 4 different brands in the same field. They are- GrubHub, Seamless, MenuPages, and AllMenus.

KEY FEATURES OF GrubHub

I. Key activities:

ü A customer places an order by accessing the GrubHub app online.

ü GrubHub hires deliverymen to deliver the order to the customer.

ü GrubHub manages logistics to process the orders.

ü To maintain their position in the food-tech world, GrubHub keeps updating and adding new features that can fascinate its customers and attract more users.

II.Key resources:

ü GrubHub uses a technological platform to attract and retain customers, helping make the food ordering and delivery a seamless experience.

ü GrubHub partners with restaurants that further helps in expanding the visibility of their services to customers.

III. Key partners:

GrubHub collaborates with two different parties that help it with the business. They are:

i. Restaurants: GrubHub makes deals with restaurants to help them promote their brand and grow business.

ii. Delivery men: GrubHub requires people who could deliver the food from restaurants to the customers, for that it hires delivery men.

IV. Key-Value Propositions:

1) Customers

a. A customer can order meals anytime.

b. A user can go through the menus of various restaurants.

c. 24/7 customer support.

d. A customer can track his order.

2) Restaurants:

§ A restaurant can increase its customer base and increase brand visibility. This saves time and money in marketing expenses.

§ The restaurants get an online platform to serve their customers better.

§ The restaurants have to pay a commission for the orders processed by GrubHub.

3)Delivery Men:

o Deliverymen get a source to earn money.

o These delivery boys also receive tips from the customers which add to their income.

V. CHANNELS

The various ways through which a customer accesses the facilities provided by GrubHub is by its website, or mobile app available for android and IOS.

GrubHub BUSINESS MODEL : How GrubHub works?

The food ordered through GrubHub app goes through the following process before it reaches the doorstep of the customer:

§ Browse: Users search through the menus of the restaurants in the app and order their meal. There are features like search and nearby restaurants in the app provided to the customers.

§ Order placing: The customer can place his order, once he goes through the menu and decides his meal of the day.

§ Preparing and packing the order: After the customer places his order, the restaurant gets notified by the GrubHub app and the restaurant starts preparing and packing the food for delivery.

§ Delivery: Once the food is prepared, a delivery boy picks up the order from the respective restaurant and delivers the food to the customer.

GrubHub REVENUE MODEL : How GrubHub earns its revenue?

Commission: GrubHub through its app enables the restaurants to get online orders and deliver food to the customers. In return, GrubHub charges an average percentage of 11% to 13% of the price of order from the restaurants.

Advertising and Marketing: Besides commission, GrubHub charges the restaurants for doing marketing and advertising on the GrubHub app, where the name of the restaurant can be featured in the list of top restaurants for a limited time.

  GrubHub revenue model  

THE REASON BEHIND GrubHub’s SUCCESS

GrubHub has some amazing options that make it a wonderful medium for online delivery services, some of them are mentioned below:

o GrubHub tries to cover almost every restaurant in the city to make its online delivering services available to the customers

o The app provides discounts to customers on various restaurants depending upon the partnership with the restaurant.

o GrubHub allows users to rate the restaurant that helped other customers to know the overall quality of the restaurant.

o Also, GrubHub tells the average pricing of the food for each restaurant.

o One of the unique options that GrubHub brought into force was the pickup option, where a customer can simply come and pick up the order once it is prepared and he gets notified about the same through the GrubHub app.

OTHER PLAYERS IN ONLINE FOOD DELIVERY INDUSTRY

UberEats: Due to the strong support from its parent company Uber, UberEats gives tough competition to GrubHub. Within no time, UberEats has won the hearts of the customers and spread across various continents.

Postmates: Postmates has a market share of 42% of US customers’ meal delivery sales.

DoorDash: DoorDash makes more than half the sales in the two biggest Texas metro areas, Dallas-Fort Worth and Houston, and it’s approaching two-thirds of the market share in its Bay Area home turf.

CONCLUSION

The online food delivery service is all about providing convenient services to the customer which is done by leveraging technology and developing network linkages with various stakeholders (restaurants and delivery personnel). Given the demand and future outlook, the industry is in a sweet spot and set for the long haul. We are bound to witness continuous improvements with further advances in technology. Rest assured the customers can sit back and trust the online food delivery industry to keep their food cravings at bay in the most efficient manner possible.

If you are also thinking of entering into the food industry and looking to develop a food delivery app for your business, then get in touch with AppsRhino. We would assist you in developing and designing the most appropriate, unique, and user-friendly app.