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GrubHub.com
If you kitchen drawer overflows with menus from delivery restaurants, GrubHub.com may prove your lifesaver. That is, if you live in the eight major metropolitan areas where the Web site operates (a number that will rise in 2010). Through its technology development, fanatical customer service and aggressive marketing, GrubHub.com has become a leader in the online food-delivery industry.
The Web site, accessible via iPhone and other mobile apps, shows visitors all restaurants that deliver to their address. They can search by cuisine or menu items, compare prices, view delivery hours, read reviews and even take advantage of unique coupons. More than 11,000 menus reside on the Web site, with direct online ordering available to more than 3,000 restaurant-partners in eight major metropolitan markets.
Recession Proved a Boon as Online Orders Boom
Restaurant partners pay GrubHub.com a small percentage of the meal price each time an order is placed. The company doesn't mark up restaurant menu prices once the menus are placed in its database.
Founders Matt Maloney and Mike Evans cooked up the idea for GrubHub.com in 2004 while working as software engineers at a Chicago-based internet company. Evans wrote version one of GrubHub.com because he says he was frustrated while searching futilely for delivery restaurants and grumbling about inaccurate orders.
One winter night after riding home on a crowded bus and too tired to cook, he called nine restaurants before finding a Chinese restaurant that delivered. “Got some weird plum sauce stuff on shrimp, or pork, I don’t know. I started writing GrubHub.com that night.”
Winning New Venture Challenge Sparked Growth
In 2006, the pair won the University of Chicago’s Edward L. Kaplan New Venture Challenge, an annual competition to promote entrepreneurship. GrubHub.com excelled over 60 other competitors, with the co-founders pitching their plans in 15 minutes to 19 judges. Their selection was based upon the uniqueness of their venture, the fulfilling of an unmet need, exceeding customer expectations and the likelihood of market success. They used the $25,000 prize to expand into new markets.
In 2007, GrubHub.com, secured $1.1 million in Series A funding through Amicus Capital, Origin Ventures and several angel investors. The funds allowed it to expand rapidly into three top delivery markets: New York City, San Francisco and Boston. In the process, it quickly outpaced its initial goals by placing more than $20 million in restaurant delivery orders in 2008 and partnering with more than half of the delivery restaurants in its markets.
In March 2009, the company secured a Series B round of financing for $2 million, a deal co-led by Origin Ventures and Leo Capital, with Amicus Capital also participating. Again funds were used to expand its operations while also creating new innovative products to enhance user experience and improve delivery-service quality.
Being Tech Savvy Helps
The latest round of funding from Origin Ventures and Leo Capital was used to further refine GrubHub’s elaborate web platform and to launch in more cities. Announcing the financing, Origin Ventures Managing Partner Steve Miller said the investment would allow GrubHub.com “to continue to build the technology and business team required to expand its customer reach geographically and product wise.”
On the tech front, GrubHub.com operates on finely tuned empirical measures of the effectiveness of its advertising. In effect, the company serves as an invaluable resource for independent neighborhood restaurants to advertise efficiently and effectively on the Web, helping them drive their own growth and profits.
GrubHub.com also is savvy about social media, establishing an active Twitter account, a Facebook page, and a food-related blog. Since many of its loyal followers are young professionals among Generation Y, the feedback is steady and strong. A recent Tweet from explodedsoda read, “I wish GrubHub had an option for me to say show everything BUT pizza.” Another, from maratryndin, said “GrubHub.com delivers yummy Thai food faster than a replicator on Starship Enterprise.
A Snapshot of GrubHub.com - Makes ordering food at home easier and more convenient via its Web site. - Web site features more than 11,000 menus, with direct online ordering to more than 3,000 in 8 major cities. - Employs more than 50 people. | What Illinois and it Private Equity Provide -A dense concentration of people and restaurants in Chicago, providing a perfect environment for its initial launch. -Funds for technology advances, especially in social media where its primary customers abound. -Access to capital, including initial seed money from the University of Chicago and venture capital from Origin Ventures and Leo Capital Holdings |