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GrubHub Seamless Taking Local Restaurants to the Internet

Posted on Monday, Jan 20th 2014

According to a research study by Cornell University, 40% of all adults in the US have placed food orders through an online platform. Restaurants are also seeing a growing adoption of online media in their business. Nearly 16% of the restaurants studied had a mobile app, but a mere 35% of these mobile apps let consumers place orders through them. There are a few players in the market who are trying to address this issue.

GrubHub Seamless’s Offerings

New York-based Seamless was founded in 1999 to offer a more effective online food delivery service to its consumers. Since its inception, the company has focused on simplifying the process of placing orders online and getting food delivered to the user, especially in metro areas. Seamless’s key goal is to provide more business for local takeout restaurants while ensuring customer service to diners is not compromised.

Seamless also offers its service to enterprises, enabling them to place lunch orders with local restaurants. Recently, local review site Yelp joined this industry as well. However, according to analysts, the biggest advantage Seamless has over Yelp is its enterprise consumer base. Seamless is estimated to have 4,000 companies as their customers who order entire floor lunches from their website.

The biggest driver in its success has been the growing adoption of mobile devices, especially by young professionals who use their apps to place orders while on the move so that food is delivered by the time they reach their destination. Nearly 40% of their orders came through a mobile device last year.

The app lets the user join for free and does not charge the consumer any fee for placing the order. Additionally, the user has the added advantage of being able to use Seamless’s credit card processing solutions so that they do not have to pay cash when the food is delivered. The accuracy of the order is also ensured as the consumer is the person entering the meal requirements. For the restaurant, Seamless offers the added advantage of a simple web presence. In return, Seamless charges a commission per order.

GrubHub Seamless’s Financials

Last year, Seamless merged with their biggest competitor, Chicago-based GrubHub. Today the merged entity, GrubHub Seamless, has over 2 million users accessing online menus and placing orders in over 20,000 restaurants spread across 500 cities in the U.S. and the U.K. Together, these two players were responsible for food orders of more than $875 million in 2012.

The popularity of the service can be gauged from their growing revenue numbers. Seamless grew 60% over the year in 2012 to generate $85 million in revenues. Post the merger, analysts expect their revenues for the previous year to be more than $200 million. The merged entity is expected to be recording growth rates of more than 40% annually and is valued between $3 billion and $5 billion.

Together, the two players have a big investor base with funds from Origin Ventures, Leo Capital Holdings, Amicus Capital, Benchmark, DAG Ventures, Lightspeed Venture Partners, Greenspring Associates, Mesirow Financial, T. Rowe Price SeventySix Capital, Spectrum Equity, and Stripes Group. The denomination of investments made by these investors is not known. GrubHub Seamless is now looking to go public and an IPO is expected within the next two years.

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