![]() GrubHub’s website is easily accessible by both desktop and mobile, ensuring the consumer can order whenever and wherever he/she is hungry. GrubHub’s operating decisions show the company’s commitment to aligning their interests with not only their restaurant customers, but also consumers. Additionally, the company generates supplementary revenue by offering a tiered percentage fee a higher percentage allows restaurants to be listed at the top of GrubHub’s search page. Many of the company’s smaller customers double their overall revenue by signing up for GrubHub. On average, restaurants that are part of the GrubHub network generate six times the monthly takeout revenue of restaurants not on the platform. Within one year of joining GrubHub, restaurants report a 30% growth in their monthly takeout revenue. In addition to generating growth for GrubHub, this model has translated into success for restaurants as well. This model means that GrubHub’s interests are aligned with its customers, as restaurants only pay the company when an additional revenue generating order is placed. Therefore, GrubHub’s revenue model is to charge restaurants a flat percentage fee on each order placed on its website. While diners derive better takeout experiences by using GrubHub, restaurants earn revenue and profits on each order placed through the platform. GrubHub is a software company, connecting restaurants to potential diners. Both sides of the company’s marketplace contribute to the others’ growth – more users generate increased profits for restaurants, driving more restaurants to sign up for the platform. GrubHub’s success can be traced to its clear alignment with both the consumer and the restaurant. Last quarter, restaurants on the platform saw $550 million of gross food and beverage sales through GrubHub. On average, consumers place over 200,000 orders per day through the site. Rapidly growing, GrubHub is present in 900 cities in the U.S. While GrubHub has many competitors, such as Caviar, Foodler, and Eat24, it has remained the leader in the online takeout sector, with its position being further cemented by its merger with in May 2013. GrubHub’s convenience and service orientation fulfills consumers’ current demands for delivery of everything though an app. GrubHub’s value proposition is to make takeout ordering more efficient and less frustrating for consumers and to increase revenue and margins for independent restaurants. At its core, the company is a two sided marketplace, connecting 35,000 independent restaurants with 6.5 million hungry consumers. Headquartered in Chicago, GrubHub is the leading online and mobile food ordering company in the United States. These include Facebook ( FB), up 82.0% since its IPO, Twitter ( TWTR), up 26.1%, and LinkedIn ( LNKD), up triple-digits.When GrubHub IPO’ed in April 2014, the shares popped 31% as they freed to trade in the secondary market. Most of the companies that went public last year have outperformed the broad markets and many generated triple-digit returns. As per IPO research intelligence Renaissance Capital, 2013 was the banner year for the IPO market, as 222 companies completed their IPOs, raising nearly $55 billion. The 2013 IPO market delivered its best performance in more than a decade. Considering Foursquare's user base of over 45 million, we believe that this significantly expands GrubHub’s reach. Most recently, GrubHub Seamless announced a partnership with Foursquare that will allow Foursquare users to order takeout directly through the app available on all iOS and Android devices. They use their mobile devices to find out restaurant locations, check out menus and read reviews. According to a new study by the Interactive Advertising Bureau (:IAB) and Viggle, approximately 69% of consumers order food online using a mobile device. The frequent use of tablets and smartphones has fueled the growth in the online food ordering market. GrubHub Seamless is making great progress to improve revenues, thanks mostly to a surge in mobile users and increasing demand for online food ordering services. Given the lack of details, it is reasonable to assume that a GrubHub Seamless IPO still might be some way off, but it is worth speculating whether the company will be a good investment. No details were made available beyond the confidential announcement. The company is expected to launch the IPO in the first half of the year.
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