How Does Grubhub Work? | Grubhub Business Model

Wondering what’s going to be your today’s grub? Where are you going to get your food ordered from? If this is what you’re thinking then you haven’t tried GrubHub yet: a skyrocketing startup that caters to online food order and delivery needs of the customers in the most interesting way possible.

GrubHub brings you hot and sizzling food in two ways :

• Order: order different dishes of different cuisines from numerous eateries in your locality by typing in your address. GrubHub has partnered with a dedicated fleet which will deliver it to you.
• Pick up: order different dishes of different cuisines from eateries which will prepare it and pack it for you to get there and pick it up.

GrubHub makes sure that the diners get the best of what they want thus it provides 24×7 assistance to its customers and amazing deals and coupons which other competitors in the line don’t realize the need of.

As an on-demand food delivery platform, GrubHub has partnered with more than 85,000 restaurants in more than 1,600 locations across the USA and processes over 200,000 orders on a daily basis.

GrubHub Business Model

GrubHub has been successfully growing since 2004 and achieved a milestone of becoming an IPO in 2014. Its upward graphs are a result of its effectively creative business model and a promising revenue generation strategy.

GrubHub works on a 4 step dynamic model which goes in the following way:

• Search: customers can search through a list of restaurants and select their favourite food from their favourite cuisines. They can avail special deals and offers by skimming through the restaurant community on the platform. The search results can be refined by selecting the location for placing the order.
• Place an order: Once the customers have decided their order they have the option of completing the transaction by making an online payment (or opting for cash on delivery)
• Process: After receiving the order GrubHub redirects it to the particular restaurant. The restaurant, in turn, prepares and packs the order for delivery.
• Delivery: GrubHub delivery personnel completes the final step by picking up the order from the respective restaurant and delivering it to the customer.

GrubHub’s success is highly praiseworthy because of their effective tactics of marketing them as a restaurants menu aggregator and their determination of offering their customers amazing experience and making them return to their partner restaurants. GrubHub’s unique options for its customers have helped it take a giant lead in this sector. Some of its salient features are as follows :

• It has partnered with almost all the restaurants of the cities thus offering it’s customers a wide variety of food items.
• It provides special discounts to its users for different restaurants depending on their partnership.
• GrubHub has developed a rating system which places restaurants in order on the basis of their reviews. The users rate the restaurants on the basis of the quality of the food and their experience.
• Its technology helps you enhance your experience by telling you the distance of the restaurant from the location, average food price, delivery fee (if any), estimated wait time for the order in addition to the presence of a 24×7 customer care team.
• It presents a Pickup option on its platform which has helped customers buy their favourite food from great restaurants without any hassle.

2 Tiered Customer Strategy Of GrubHub

Since Grubhub combines the aggregator business model and the on-demand hyperlocal delivery business model, the company has to woo two customer segments-

Users

• People who do not wish to cook for dinner and want to enjoy with their family at a great restaurant find GrubHub a helpful platform.
• People who are diehard food lovers but do not have the time to go out and like getting their food delivered at their doorstep.
• For working professionals who find it difficult carrying a lunch box to their cabin often rely on buying food from outside for lunch.

Restaurants

• Restaurants looking to expand their business by increasing their reach and customers, doing online branding, find GrubHub a trustworthy partner for their establishments.
• Food joints which wish to deliver their food to the doorstep for their customers without involving much investment.
• Restaurants which have a shortage of delivery personnel to fulfil orders at home trust GrubHub for their deliveries.

How Does GrubHub Generate Revenue?

GrubHub being an on-demand food delivery platform works on a simple yet effective less-ownership model and generates revenue by the following methods:

Commission On Orders

GrubHub charges a commission percentage from the restaurant for each and every order delivered.

The amount of commission being charged ranges from 5% to 15% of the value of the order depending upon the partnership with the restaurant. On average, it charges a commission of about 12-13%.

Marketing Plans for Restaurants (Sponsored Listings)

GrubHub is a great platform for restaurants to enhance their market presence and expand their consumer base. The company has well-defined marketing and advertising plans for the restaurants which feature them on the top of the results for a limited time and results in bringing more traffic.

The company charges a higher commission rate for such listings (~20%).

GrubHub’s Market Presence

GrubHub is one great example of an upwards shooting business model. One aspect of the success of a business model is its customers and their satisfaction. It is important for a business to not only retain its customers but to increase its reaches as well. The main goal for any business is to not just sell their products but to strengthen its relations with its customers. GrubHub has come out as a giant player in this industry because of it’s sheer determination and hard work.

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