How Grubhub delivers on the promise of digital
- Summary:
- Grubhub can date its origins back two decades, but digital delivery in the food sector is on the rise today.
One of the leading third party delivery app providers in the US today is Grubhub, but in reality its history can be tracked back two decades to a service called Seamless, set up to help Manhattan workers eat seamlessly at the office.
That was a different age, recalls Grubhub CEO Matt Maloney:
Recall smartphones and apps did not exist when Seamless launched in 1999, and Grubhub initially solved the last mile problem by sending faxed orders to restaurants. What has not changed is our singular focus on connecting hungry diners with all of their favorite local restaurants.
Grubhub merged with Seamless in 2013 and now boasts some hefty stats across the two platforms - more than $10 billion in food orders to New York restaurants alone; 400 million doorbells rung; delivery people who have earned more than $1 billion in tips. But it wasn’t always an easy sell, notes Maloney:
I remember the first restaurant pitch I went on 15 years ago. It was a Thai Sushi fusion mom-and-pop restaurant in Chicago's loop. I walked in with my laminated flip book, ready to explain online demand and how it could grow their business. Little did I know that many independent restaurants, including this one, had been burned in the initial Internet bubble by paying thousands of dollars to contractors to build a website.
Explaining how our platform would aggregate demand better than individual websites was an uphill battle, but I sat there for over an hour and a half explaining the concept to the son of the owner. I'm not sure if I was persuasive or if he felt bad for me, but eventually he signed up and that was the first dollar we earned.
Growth
Grubhub came out of 2018 with 17.7 million active users and 25,000 logos on the Seamless and Grubhub apps. One of the most recent is Dunkin’ Brands; others are more established, such as Yum! Brands, owner of Taco Bell, Pizza Hut and KFC. This latter use case is one that Maloney points to as a good exemplar:
To date, we have launched approximately 6,500 Taco Bell and KFC locations on our marketplace with pick-up, delivery and full Point-of-Sale (POS) integration. Without national marketing support or launching their branded applications, we are still driving volume to their stores and generating thousands of new diners for Grubhub everyday. We continue to work closely with the brands and their franchisees to rollout additional stores and build our marketplace in these communities. Additionally, we have been working with the Pizza Hut team and recently began piloting some Pizza Hut locations on our marketplace and are planning on expanding the several hundred stores in the coming months.
There’s also some strong marketing benefits to be had, he adds:
Taco Bell’s first delivery through Grubhub integrated national marketing campaign is launching [now]. I have seen the television spots that are launching and they are fantastic. We are partnering closely with the Taco Bell team to maximize the impact of this campaign and help their franchisees grow their business. Both teams are excited about the upcoming campaign and I've worked closely to maximize the impact.
Taco Bell has invested heavily in a delivery focused comprehensive breakthrough campaign across television, PR, digital, social, email, audio and restaurant and more that integrates a Grubhub driver and branding into the story. In exchange for this support, Grubhub is funding free delivery for an extended period of time. We think this is a true win-win not only for both companies, but for all of our customers and all of the new customers we will introduce to our brands through this campaign and through our partnership.
Why Grubhub?
As to what differentiates Grubhub from other third party offerings, Maloney is of course prejudiced, but argues:
Grubhub is the only platform bridging branded and marketplace transactions, supporting all of our restaurants digital business whether it's pickup or delivery. We work like an outsource technology group, bringing whatever solutions that brand needs as well as providing the integrations to tie it altogether. Our strategy of deeply partnering with restaurants to grow their business profitably is yielding a better experience and more selection for our diners on our marketplace, creating significant and long-term competitive differentiation.
We now have more than 25,000 enterprise brand locations on the platform and continue to build deeper relationships with leading regional and national brands. For example, we recently launched the pilot with Dunkin’ Brands where we completed a full point of sale integration with our marketplace in approximately six weeks, more to come on this exciting partnership as we expand the rollout over the coming months. We're able to execute a fully integrated POS relationship including marketplace and pilot in about six weeks. If you think about the level of effort that requires, there's a tremendous amount of technology and products. Dunkin’ is a great example of what we want to do with national partnerships broadly.
It’s not about a one-size-fits-all approach, he adds:
Every restaurant, every brand, every team kind of has different requirements, they need a different solution. The platform that's going to be partner with them needs to have a variety of products that they can leverage in the situation. Our goal overall is obviously to accelerate the shift that we're seeing from offline to online ordering and capture as much of that volume as possible. So we bring the largest marketplace as well as an industry leading products for chains…We’re, for example, building the KFC app at this point. We are fundamentally executing core technology for brands. We're helping them with transaction management. We're doing delivery from their applications. We're doing full POS integration and CRM tools, including loyalty. That's a suite of products that we bring to enterprise partners that no one else is able to bring to the table.
My take
The Grubhub story is an impressive one and the CEO’s reference to what the firm does as being essentially a tech outsourcing provider is an interesting one, akin to Ocado being a technology firm rather than a grocer or Uber being a digital firm, not a taxi company. The need for custom solutions is also well made. That said, I do wonder how long it will be before a commodity platform solution, inevitably from Amazon, comes along to challenge the status quo in this space.