Grubhub for Restaurants: Pros and Cons of Using Grubhub

Today, almost every business has adopted a digital paradigm, as people worldwide prefer using the solutions available on their mobile phones. There are numerous platforms related to various market sectors being utilized by users from all over. But, after the COVID-19 pandemic, the requirements for applications belonging to the meal delivery vertical rose to a significant level.

Since then, food delivery has been among the most preferred business ideas by people. There are countless meal-ordering platforms launched in an application store from different regions, and they are responsible for such demands of food-ordering solutions being generated. It includes Grubhub from America, Deliveroo from the UK, Swiggy from India, Talabat from Kuwait, and many other contenders.

Despite all of them achieving considerable growth, Grubhub took it to another level. The company is currently operating its business in every state of the US. According to the 2023 report, Grubhub earned revenue worth $2.1 billion in 2021, which was a 16% rise compared to the previous year.

If you want to know more about an organization, its growth timeline and several perks and drawbacks are mentioned here. Reading each of those sections will assist you in learning about the company.

Growth Timeline of Grubhub:

The firm started its venture in 2004. It was founded by Mike Evans, Matt Maloney and is headquartered in Chicago, Illinois. Moreover, Grubhub came with a vision of serving as an appropriate option for paper-based menus to people and offering restaurants a ready-made stage for gaining more sales.

• After two years, the founders won first place at the University of Chicago for Grubhub’s business plan in 2006. It motivated them to go forward with running a venture by executing the same strategy ahead in the future.

• In the next year, an organization expanded its meal delivery trade in 2 more cities: New York and San Francisco, in 2007, by raising a fund worth $1.1 million from the series A round.

• The company continued fundraising and earned $2 million and $11 million in two consecutive years, respectively, in 2009 and 2010.

• Later in 2011, Grubhub went much higher in a hyper-local meal delivery segment by taking over numerous brands in the same sector, along with collecting a large sum of $70 million from several investors.

• In 2015 and 2016, the firm broadened its venture significantly, as it acquired 4 more food businesses over different geographical areas of the US.

• In 2017 and 2018, Grubhub became unstoppable, as it took over the many giant players of an American meal delivery vertical by spending ample capital. 

• After witnessing the dominance of Grubhub in the food ordering market, a Canada-based contender – SkipTheDishes, soon announced quitting the US meal delivery sector in 2019. Grubhub immediately acquired it when a company declared its exit. 

• The report for 2022 says that 31 million active diners in 2020 were present on Grubhub. It indicates that the brand’s popularity reached its peak, as the highest number of users were found utilizing its solution.

Thus behind such growth, the uniquely designed Grubhub business model plays a vital role that consists of attractive value propositions, customer segments, and many other elements inside it. No matter how successful a firm’s trade may be, there would surely be certain positives and negatives of its application. Check out the next section for the same. 

Pros And Cons of Utilizing Grubhub

Although the platform achieved great success. But, with the passing of time, several pluses and minuses were discovered by analyzing the conversion rates of many eateries. If you as a restaurateur are excited to know, then consider all of them stated below:

Pros:

Attract New Consumers:

Instead of facing troubles in acquiring new customers, there are many who have received fresh audiences. It is because the users who are willing to have an experience of newly established eateries in their town can find them easily. In addition, to catch the eyes of consumers, it also offers restaurant owners an option of paying premium priority suggestion charges, from which they can increase the visibility of their ventures among people.

Offer Operational Support

One of the great reliefs that eateries experience is they don’t need to worry about how to provide their dishes prepared to customers at their doorsteps using Grubhub. It is due to an organization offering its own troop of deliverymen to restaurants registered inside its solution. This will help merchants to save operational costs of accomplishing the deliveries of orders received.

Powerful Promotions

By enrolling in Grubhub, the restaurant admins don’t require to think of marketing their business. It is because aggregator platforms are far ahead in the race of achieving massive user engagement through social media from advertisements and many such activities. Hence, eateries can make a substantial impact online among users without dedicating much effort by utilizing Grubhub’s app.

Also Read: How to Launch On-Demand Delivery Platform

Cons:

Huge Amount Charged

The eateries are deducted a fixed percentage amount from payment of every order received from a solution. A charge’s percentage may vary between 10% – 40% on accomplishing each order of a specific user. Thus, due to hefty commissions taken from restaurateurs, their profit margins are narrowed to a significant extent.

Unable To Hold Customers

Despite receiving new consumers from a platform, the merchants face an issue of retaining them. The reason behind it is very simple they can make their eateries stand apart from the competition, which eventually leads to losing their customers.

Negative Effect on Users

Offline visitors of the restaurant’s premises might suffer from a lack of facilities provided to them. An explanation of such a problem is quite straightforward. Most resources of a particular eatery are occupied for accomplishing online orders they get. Hence, it lays a negative impact on customers of specific cafes.

Final Verdict:

So, by reading the post, you must have received a clear idea about the demands of Grubhub. You might be knowing the fact that every particular venture has its own positive and negative sides. So, in the case of Grubhub, it also has some drawbacks, but not much that they hide the benefits of utilizing it. If you, as a restaurant owner, are thinking of registering your venture on any third-party marketplace solution, then Grubhub can likely be a sure hit, as its application is utilized by tons of users across the US.