How Does Grubhub Make Money?

“There is no sincere love than the love for food”

Entrepreneurs took this phase to a next level adding to the long list of on demand apps. This has increased the competition in the market while marking new entries in the food booking and delivery on-demand services.

Due to this increase in the on-demand food delivery app services, the overall revenue of the industry crossed the mark of $7,730million in 2019. It is also predicted by Allied Market Research that by 2023, the revenue will reach $16.62 billion.

What percentage does GrubHub take?

Read More: Food Delivery App Development Guide

If you are wondering about this question then let us tell you. One of the major names is Grubhub that holds more than 30% of the industry. To understand the industry leader in a better way, let us delve together and check out its ingredients. The on demand app developers can help you out to achieve a rate of success in the food industry.

In this article, we are going to cover the business model, GrubHub revenue model, Business Metrics, Value Proportion, and challenges faced by GrubHub. 

What is Grubhub?

Being knowing about “how does GrubHub make money”, let us give you an insight into GrubHub. One of the leading names of food delivery apps is Grubhub that is in the market for a long time now. This mobile and online platform offers delivery and pick-up services to users.

It is a platform that delivers food to customers from restaurants at doorsteps. Grubhub follows a business model that has simplified the services offered to the users while helping out the restaurants.

As per the estimation, Grubhub connected more than 1,700 cities with takeout orders above 95,000 in the USA and London. However, Grubhub is used by approximately 20 million active users across 2,400+ cities with 125,000 restaurants.

Before diving into the whole “how do food delivery services make money”, let us understand the business first. 

Unique Selling Points (USP) & Timeline of GrubHub

GrubHub is a topmost app that is ruling the market with the advanced model. There are many achievements that the app has managed to sign up under their name including:

• The app is running in around 900 cities in the USA.
• There are approximately 234,700 orders daily as per the records.
• More than 125,000 restaurants are partnered with GrubHub in the USA and London.
• There are a total of 1600 cities in UK & USA using GrubHub

Business Model Of Grubhub

GrubHub has reached a level of increasing its annual revenue and taking it to a new level over time. In order to understand the efficiency of the business, it is best to know about the GrubHub business model.

The dynamic model follow up four major categories that include:

• Search – In this, the customer can check out the listing and search for the order as per their requirement. This option also includes the offers and deals that customers can skim through further. The refinement of orders is also done as per the location.
• Order – Once, the searching is done, customers can place the order and complete the transactions while choosing cash on delivery and online payments.
• Process – GrubHub follows the proper process to get the order done such as order, prepares, and order packing. The order placed by the user is directed to the restaurant where further work is accomplished.
• Delivery – The personnel pick the order from the restaurant and deliver it as per the requirement. 

These are the major steps of the business model of Grubhub that helps in understanding the menu aggregator and offer enhanced user experience. There are a number of silent features that make GrubHub an extensive choice.

• The restaurants can offer special discounts to the customer via GrubHub.
• The restaurants are partnered up with GrubHub that offers customers a platform to get a variety of cuisine.
• There is a rating system through which customers can rate restaurants to enhance productivity.
• The Pickup option has also made it hassle-free for the customers to get the services at doorsteps.

Read More: Top 10 Food Delivery Apps in the Market

These are the major points that also showcase the points on” How Does GrubHub Work”. To understand the revenue model in a better way, let us move a step forward.

Key Partners of GrubHub

GrubHub platform works on two major key platforms that include restaurants and diners. It is increasing the value proportion of GrubHub in the market with the help of multiple services. Let us give you an insight into its food delivery business plan while understanding its value proportion. 

Value Proportion of Restaurants

The major part of the value proposition for restaurants is accomplished with the full menu prices. GrubHub generates the prices of the order a bit higher margin to grow the business. 

However, the takeout is inefficient, expensive, and difficult to track to achieve success in the market. Hence, GrubHub is a great step forward to grow a business in a risk-free manner. The efficiency makes it a compelling factor for the restaurants.

• There are no subscription and upfront fees for restaurants in GrubHub.
• The users can avail of the number of discounts or offers on their own. Hence, restaurants don’t need to put a discount on the price.
• GrubHub only gets the amount when diners generate an order instead of earning from restaurants.

Hence, GrubHub offers high-return solutions with low-risk making it highly trackable and efficient.

Value Proportion of Diners

The direct line is something that can be gained with GrubHub. Individuals can easily avoid frustrations, inefficiencies, and inaccuracies with order. 

Diners get the option of takeout order and delivery options through which the user experience has become frictionless. The key features include:

• GrubHub makes it efficient, accurate and frictionless for customers.
• It is a personalized, intuitive, and easy-to-use platform connecting the audience with restaurants.
• The app works on re-ordering convenient flow algorithms storing history data.
• GrubHub is transparent and offers information to the audience regarding major aspects.

Revenue Model – How does GrubHub Make Money?

GrubHub works on a specific business model that helps it in generating revenue. This includes the commission on the per-order aspect on the basis of percentage. The platform then offers delivery services to ensure that food reaches the customer.

GrubHub revenue model includes the market aspects but only money from the diners order. The commission rate is fixed as per the base rate done by the restaurants. The restaurants make sure to go for the higher commission to give diner an exposure. 

However, GrubHub also takes some commission on the restaurant end and there are the delivery services charges included in the list. 

GrubHub also includes marketing strategy for food delivery service that can help restaurants to expand the business. The plan is well-defined to help the restaurants reach deeper in the market and bring in traffic. This is also commission based allowing the app to generate revenue with the GrubHub marketing strategy.

This is the basic model through which GrubHub generates revenue. Along with it, GrubHub has subsidiaries through which they are earning money such as LevelUp, Eat24, Tapingo, Seamless, & BiteGrabber. 

Market Presence GrubHub

The GrubHub business model has managed to shoot up in the market reaching an enhanced level. It also fixes up the success of the app in the market offering enhanced satisfaction. At the present time, the market scope of GrubHub has reached a step forward and strengthening the trust factor in the market.

The giant players like GrubHub work with hard work and sheer determination that can allow the market to grow and take a step forward.

Read More: Guide to On-Demand App Development

GrubHub Future Challenges

No one can achieve things easily. There is a set of hidden opportunities that can lead to the challenges in GrubHub as well. It is essential to know hurdles and tackle them accordingly such as:

• New technologies implementation
• Retaining and attracting a cost-effective manner for restaurants
• Sustaining and generating profitability and cash flow
• Maintaining, protecting, and enhancing the image
• Takeout space strengthening.

Now you have an idea of “how does GrubHub make money”. So, if you are planning to dive into the business world then make sure to do it the right way. The on demand app development can help you to get an insight and get started with the business. 

Frequently Asked Questions (FAQs)

Chandrapal Singh

Co-founder

Director and one of the Co-founders at Appventurez, Chandrapal Singh has 10+ years of experience in iOS app development. He captains client coordination and product delivery management. He also prepares preemptive requisites and guides the team for any possible issues on a given project.