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How Does Grubhub Make Money (Business and Revenue Model)

The Grubhub business model

How Does Grubhub Make Money?
Here’s what you should know:
  • What is Grubhub, and how does Grubhub work?
  • How does Grubhub make money?
  • Grubhub+ Subscription
  • Restaurant Partnerships (commission)
  • Grubhub Corporate
  • Fees (delivery fees, small order fees, and service fees)
  • Gift Cards
  • Growth through acquisitions
  • Grubhub’s profit and revenue
  • What is the Grubhub business and revenue model?
  • Grubhub’s funding and valuation

How does Grubhub make money? Here is a full, in-depth, breakdown of their six (6) revenue streams and the different products and services they offer, as well as the Grubhub business model, their year-over-year revenue, and how Grubhub works.

What is Grubhub, and how does Grubhub work?

Grubhub is an online food ordering and delivery service that connects local restaurants and stores with customers. Founded in 2004 by Mike Evans, Roman Gaskill, and Matt Maloney, before eventually going public in 2014 under the ticker “GRUB”.

With a 16 percent market share in the U.S, Grubhub has the third-largest food delivery market share in the U.S with more than 22.6 million active customers using the service.

Some of Grubhub’s competitors include DoorDashPostmates, Instacart, Gopuff, Uber Eats, and other food delivery services.

Grubhub App in Apple App Store | Grubhub Business Model | How Does Grubhub Make Money?
Source: Apple App Store | Grubhub

How does Grubhub make money?

Grubhub features over 310,000 restaurants on its marketplace and partners with more than 30 million diners. Operating across 4,000 U.S cities serving over 22.6 million active users.

In 2019, Grubhub facilitated and delivered more than 668,000 daily orders that resulted in nearly $6 billion in gross food sales to restaurants.

So, how much is Grubhub making off of those $6 billion in gross food orders with more than 668,000 daily orders?

Below is a breakdown of how much money Grubhub makes from those orders – including all other revenue streams and how much they charge for each service.

Here are the 6 ways of how Grubhub makes money (in 2021):

Grubhub has a revenue model that makes money in six (6) ways.

#1. Grubhub+ Subscription

In February 2020, Grubhub launched its own monthly subscription service called Grubhub+. Offering unlimited free deliveries on all orders over $12 among other perks to its paying subscribers for a monthly fee.

With more than 22.6 million active users, it’s unclear how many have already turned to the subscription service.

  • $9.99/month
Grubhub+ Subscription | How Does Grubhub Make Money?
Source: Grubhub

#2. Restaurant Partnerships (commission)

Grubhub partners with over 310,000 restaurants nationwide.

Their commission structure is tailored to whatever services they provide to that business. Whether the customer ordered from the Grubhub marketplace or only handling the delivery.

Grubhub commission:

  • Marketing Commission: 0% if ordered on restaurants site, 20%+ if ordered or called from the Grubhub marketplace
  • Delivery Commission: 10%
  • Processing Fee: 3.05% + $0.30
  • Pay Me Now Fee: $1 per balance request transaction

#3. Grubhub Corporate

Another business-to-business (B2B) model they have in place is working with corporate companies to feed their large numbers of staff. Whether that’s through delivering individual meals, catering, group orders, or virtual events – Grubhub will deliver.

Grubhub Corporate has a number of corporate clients including notable ones like Twitter, NYU, GoFundMe, and IMG.

Grubhub Corporate Clients | Grubhub Business Model
Source: Grubhub

#4. Fees (delivery fees, small order fees, and service fees)

Grubhub adds fees onto each eligible order including delivery feesservice fees, and small order fees.

Delivery Fees

Every order gets charged a delivery fee unless it’s a Grubhub+ subscriber who spends $12 or more on the order.

  • $2.49

Service Fees

Grubhub charges a service fee to every order, whether you’re a Grubhub+ subscriber or not.

  • 10%

Small Order Fees

Another fee Grubhub adds on is a small order fee. Applied at checkout if your subtotal is less than $10.

  • $2 for orders under $10

#5. Gift Cards

Grubhub also sells gift cards that customers can purchase for friends, family, colleagues, etc.

Pricing:

  • Solo gift cards: $25, $50, $100, or $250, 500, or custom
  • Bulk gift cards: $2,000 minimum
Gift Cards
Source: GrubHub

#6. Growth through acquisitions

Grubhub has acquired 13 companies in its 21 year period.

List of Grubhub acquisitions:

  • Milk and Eggs, acquired by Grubhub in 2019 for an undisclosed amount, connects customers looking for local farms and artisan food makers.
  • LevelUp, an online food delivery platform, was acquired by Grubhub in 2018 for $390 million.
  • Tapingo, acquired in 2018 by Grubhub for $150 million, is an app that offers food pickup and delivery services for college campuses.
  • OrderUp, an online food-ordering and delivery platform operating in at least 37 markets were acquired by Grubhub in 2018.
  • Dashed and Foodler, acquired by Grubhub in 2017, are online food delivery services.
  • Eat24, acquired in 2017 by Grubhub for $287.5 million, is an online food ordering platform.
  • LAbite, acquired by Grubhub in 2016 for $65 million, was a restaurant food delivery service.
  • Bask Labs, a takeout and delivery service for vegans and vegetarians, was acquired in 2016 by Grubhub for an undisclosed amount.
  • DiningIn, acquired by Grubhub in 2015 for $80 million, is an online restaurant delivery platform.
  • Restaurants on the Run, acquired by Grubhub in 2015, is an online food-ordering and delivery service.
  • Delivered Dish, acquired by Grubhub in 2015, was a food delivery and catering service.
  • Seamless, an online food ordering service, merged with Grubhub in 2013.
  • Dotmenu, the parent company of AllMenus and campusfood, was acquired by Grubhub in 2011.
  • MenuPages, an online and mobile food ordering company, acquired by Seamless in 2011.
Grubhub Subsidiaries
Source: Grubhub

Grubhub’s profit and revenue

In 2019, Grubhub reported a revenue of $1.31 billion.

Note: Because Grubhub is a publicly-traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the SEC. You can find all of Grubhub’s publicly released financial reports through investors.grubhub.com.

What is the Grubhub business and revenue model?

Grubhub makes money through a few revenue models that they combine within their company, they are:

  • Software as a service (SaaS) business model
  • Commission based business model
  • Mergers & acquisitions (M&A) business model
  • Fee-for-service (FFS) business model
  • B2B2C (partnerships) business model

Grubhub’s funding and valuation

In 2014, Grubhub gave its IPO offering and announced they were going public.

According to Grubhub’s crunchbase profile, Grubhub has raised $284.1 million over 8 rounds with a valuation of $7.1 billion USD.