How does Grubhub get money?

Grubhub is an online and mobile platform for the on-demand food delivery sector. The company connected 95,000 restaurants across over 1,700 U.S. and London cities in 2018. The Grubhub business model includes a range of brands such as Seamless, LevelUp, AllMenus, MenuPages, and Tapingo. It makes its money by charging restaurants a preorder commission and generating a revenue model and marketing strategy when customers place orders on its platform. It also charges Grubhub delivery companies when customers pay for these services.

Grubhub: What Is It?

You may have used Grubhub to order some, you guessed it, grub. Grubhub is a popular food delivery app that is used around the globe. You are now up to date. You are about to discover some new things about Grubhub.

Grubhub is one of the most popular apps for on-demand food delivery. You can order from a variety of restaurants on the platform. What makes it so popular?

Grubhub has reached London, England, and more than 1,700 cities across the US. This was in 2018. They have only grown in size since then.

Grubhub can generate higher margin takeout orders while still maintaining full menu prices. Grubhub's value proposition for users has been a success.

Takeout is a great option to expand a restaurant's business, even if it comes at a low cost. There is no additional staff or seating capacity.

Grubhub's main selling point is its takeout promotion. Grubhub allows you to promote your restaurant as a takeout place, but it would be expensive to do the default takeout promotion. It's also not easy to track. Grubhub makes it easy for restaurants to track orders.

Being compelling

You must be attractive to restaurants to become a profitable and successful takeout ordering service. Grubhub fits this description. What makes Grubhub so popular?

Grubhub does not charge any subscription fees or up-front fees. Grubhub doesn't ask restaurants for discounts on their menus, which is perhaps even more important. Although this may not sound like much, many of Grubhub's competitors offer similar business models. The best part? Grubhub doesn't require restaurants to pay them until the order is placed.

Grubhub offers high returns with low risk. It is extremely efficient and doesn't require any subscription fees or upfront costs. The service can also be tracked easily.

Grubhub is a great place to find restaurants. So how does Grubhub pay?

It's simple: Grubhub earns money via percentage-based, per-order commissions. Grubhub is primarily a delivery service for takeout orders, but some restaurants also use Grubhub's services. The Grubhub platform also generates revenue every time a customer places an order. Grubhub delivery is an additional Grubhub cost structure for restaurants.

Growth Drivers

Profitability is closely linked to growth. Consistency is the key to growth. Otherwise, the business will be swallowed by its competitors. Grubhub's success in this area has been consistent since its inception. Marketing, acquisition, and platform improvements were key factors in this growth. It is important to understand Grubhub's growth drivers to see how it makes money.

Marketing

Investment is the key to growth. Grubhub spent over 20% of its total revenue in 2017 on marketing and sales. These expenses included search engine optimization, online display, and television, as well as media. Grubhub has also invested huge amounts of money in digital marketing campaigns. It's one of the most popular places to order delivery and eat in the United States.

Acquisitions

Acquiring businesses is an essential step in achieving growth. Many businesses are popping up in this market that doesn't fit the criteria. Or, they may prefer to sell and settle down. However, they are still profitable. These assets are essential for growth. Grubhub has acquired a variety of assets over the years to increase its assets and improve its profitability.

What is Grubhub's Profit from the Services It Offers?

This is how Grubhub makes money from its service. Each order is charged a small amount. The company receives a small amount for each order. The restaurant app development company makes 20 orders per day via Grubhub. This means that 20 of those orders are small.

How much do they make? There is no fixed rate. Although the principle is simple, it's a little more complicated. Grubhub sets the amount each restaurant takes. A restaurant's Grubhub placement will be determined by its rate.

Grubhub makes money by two main means: diners ordering from restaurants, and users ordering from restaurants. Grubhub's primary source of income is second, since Grubhub gets paid when a customer orders from a restaurant. Diners are naturally more likely to place larger orders. This happens all the time.

The commission rates are set by the restaurants. The Grubhub placement is determined by the agreed-upon commission rate. This is known as "paid inclusion," which is controversially regarded as a way to make a profit. It's legal and it works well for Grubhub. Search engines can do this, so why shouldn't they take on delivery services?

Why do people use it?

The question of its value to its customers is at the core of every company's profitability. Grubhub is so valuable that users prefer it to the many other available online food delivery platforms. Grubhub acts as an intermediary between the user's phone and the restaurant. It doesn't make any difference if you use Grubhub or your phone to place an order. This service is, however, much more personal and therefore significantly easier for most users. The same applies to diners who order from restaurants.

Grubhub's Business Model

Grubhub isn't the only company offering similar services. Many others offer similar services to Grubhub. Grubhub's business model is bulletproof because of this and years of sound investment decisions. This is how Grubhub continues to make money and continue to earn a profit. This insight into Grubhub's business model may have been useful. What do you know about takeout delivery? You can ask any questions in the comments below about this service's business model.

What is Grubhub's 2022 Profit Strategy?

Grubhub earns money by charging customers and restaurants various fees in 2022. When ordering, customers must pay service fees. Grubhub gets a cut of any money that is made through the platform by restaurants. Grubhub doesn't make any money from tips, as those go to the drivers in full. Grubhub Plus premium subscriptions also make money for Grubhub.

Continue reading to learn all about Grubhub's business model, including the amount it charges restaurants and how much restaurants make.

Grubhub+ Subscription

Grubhub's own monthly subscription service, Grubhub+, was launched in February 2020. For a monthly fee, Grubhub offers unlimited delivery for all orders over $12 and other perks to paying subscribers. It's not clear how many people have signed up for the subscription service, which has more than 22.6 million active users.

Restaurant Partnerships (commission)

Grubhub has partnered with more than 310,000 restaurants across the country. The commission structure they offer to businesses is flexible. It doesn't matter if the customer placed an order on Grubhub or handled the delivery.

Grubhub Corporate

They also work with large corporate companies to provide food for their employees. Grubhub can deliver individual meals and cater to groups, and virtual events. Grubhub Corporate serves a variety of corporate clients, including some notable ones such as Twitter, NYU, and GoFundMe.

Acquisitions Can Lead To Growth

Over its 21-year history, Grubhub has acquired 13 companies.

Check out this list of Grubhub acquisitions.

Grubhub acquired Milk and Eggs in 2019 for an undisclosed sum. This allows customers to connect with local farmers and artisan food producers.

Grubhub purchased LevelUp, an online food delivery service, in 2018 for $390 million.

Tapingo was purchased by Grubhub for $150 million in 2018. It offers food pickup and delivery services for college campuses.

Grubhub acquired OrderUp in 2018, an online food ordering and delivery platform that operates in at least 37 countries.

Grubhub acquired Dashed and Foodler in 2017 to provide online food delivery services.

Grubhub acquired Eat24 in 2017 for a reported $287.5 million. It is an online ordering platform.

Grubhub acquired LAbite in 2016 for $65 million. It was a delivery service that delivered restaurant food.

 

What percentage does Grubhub take?

Grubhub charges 5% to 20% for each order, depending on the pricing plan that is chosen by the restaurant. These fees are used for advertising and marketing. Grubhub charges these fees for orders placed through its platforms (website and app), and they are the main source of revenue for restaurants. Restaurants with more marketing get priority in search results and receive more orders. However, they must pay a higher commission.

Grubhub will not know if you order from a Grubhub restaurant, but it may place your order through its website. Grubhub offers three pricing options: Basic, Plus, and Premium. There are three pricing packages on Grubhub: Basic, Plus, or Premium. Each package offers different benefits and charges. Grubhub charges restaurants an order processing charge for credit card processing and monitoring fraud.

A 10% delivery fee will be added if a restaurant uses Grubhub’s delivery network in place of its own. Restaurants with their own delivery network can only receive orders and the addresses of customers. They will then be able to use this information to send the food to the customers without any delivery charges.

Grubhub's Supplemental Delivery works with restaurants' in-house delivery networks. It takes over the delivery and charges a fee. The restaurant will not charge delivery fees if the customer picks up their food from their home rather than has it delivered. Grubhub does not take any percentage of drivers' tips. Instead, they keep 100% of what they give.

Is Grubhub Profitable?

Grubhub still isn't financially viable, nor is its Seamless subsidiary. Grubhub hasn't yet revealed when it expects Grubhub to be profitable, but it likely won't be soon since none of the major food delivery companies are profitable. Grubhub was purchased by Just Eat Takeaway in June 2020 for more than $7 billion.

The acquisition occurred during a period of rapid growth for the company during the COVID-19 pandemic.

Grubhub has not met expectations since then, and Just Eat Takeaway may be considering selling it. Jitse Groen, CEO of Just Eat, stated that the company's 2022 focus was on profitability and strengthening its business. This gives us an insight into how Grubhub is doing.

Grubhub: Do Restaurants Make Money?

How does Grubhub make money for restaurants? It all depends on how much the company takes. Based on how much marketing has been done, Grubhub will take between 5% and 20% of every order. Grubhub does not promote restaurants on its platform and takes a smaller cut. However, these restaurants get fewer orders.

Restaurants that are promoted on Grubhub or have priority in search results receive more orders.

 However, they must also pay a higher marketing commission. Grubhub charges delivery and order processing fees in addition to these fees. These fees reduce the final amount the restaurant receives. A recent report detailed the allegations that Grubhub prohibited restaurants from charging lower prices on other platforms. This meant they could charge less for food, but still have to pay fees.

Conclusion

Grubhub's fees, which are mostly delivery and service fees, make it money. Grubhub Plus can also be purchased at a premium. Grubhub does not make any money from driver tips, as drivers get 100% of the tips. Reach us for food delivery app development services.