There is no doubt that the food delivery industry has experienced exponential growth in recent years, with more and more people opting to order in rather than dine out. Companies like Grubhub have been at the forefront of this trend, and their financial statements reflect their success. In 2020, Grubhub generated a whopping $1.7 billion in revenue, cementing its position as one of the leading food delivery platforms worldwide.
Grubhub’s business model is simple yet effective – they provide a convenient platform for users to order food from their favorite restaurants, while also offering restaurants access to a wider pool of customers. The company generates revenue by charging restaurants a commission fee for each order, as well as by charging users a delivery fee. As more people turn to food delivery services, Grubhub’s revenue is likely to continue growing at an impressive rate.
But with success comes scrutiny, and Grubhub has faced its fair share of criticism over the years. Some have argued that the company’s commission fees are too high, forcing restaurants to raise prices or cut corners in other areas. Others have raised concerns about the treatment of delivery drivers, who are often classified as independent contractors rather than employees. Despite these challenges, Grubhub’s financial performance suggests that the company is doing something right – and as long as people continue to order in, Grubhub is likely to remain a major player in the food delivery industry.
Revenue Breakdown of Grubhub
Grubhub is a leading online food ordering and delivery platform that connects customers with local restaurants. The company generates revenue from several sources, including commission fees, delivery fees, advertising, and subscription fees.
- Commission fees: Grubhub charges a commission fee to restaurants for each order placed through its platform. The commission fee ranges from 10-30% depending on the restaurant and the market.
- Delivery fees: Grubhub charges a delivery fee to customers for each order delivered by its drivers. The delivery fee ranges from $0.99 to $7.99 depending on the restaurant and the market.
- Advertising: Grubhub offers advertising services to restaurants that want to promote their business and increase their visibility on the platform. Grubhub charges restaurants a fee for each click on their ads.
Grubhub also generates revenue from its subscription service, Grubhub+, which charges customers a monthly fee for free delivery and other perks. Additionally, Grubhub has recently launched new services such as Grubhub for Work and Grubhub Direct that aim to help restaurants integrate their ordering and delivery systems with Grubhub’s platform.
According to Grubhub’s Q4 2020 financial results, the company’s revenue for the quarter was $494 million, up 39% from the same quarter the previous year. The breakdown of revenue by segment is as follows:
| Segment | Revenue (Q4 2020) |
|---|---|
| Grubhub Marketplace | $347 million |
| Seamless Marketplace | $21 million |
| All other revenue | $126 million |
The Grubhub Marketplace segment represents revenue generated from orders placed through Grubhub’s online food ordering and delivery platform. The Seamless Marketplace segment represents revenue generated from orders placed through the Seamless brand, which was acquired by Grubhub in 2013. All other revenue includes revenue from advertising, delivery fees, and other services.
Overall, Grubhub’s revenue breakdown shows that the company’s core business of connecting customers with restaurants through its online platform remains the primary source of revenue. However, Grubhub’s expansion into new services such as Grubhub for Work and Grubhub Direct suggests that the company is exploring new ways to grow its revenue and expand its reach in the food ordering and delivery market.
Grubhub market share in the food delivery industry
Grubhub is one of the largest online and mobile food ordering and delivery marketplaces in the United States. Ever since its establishment, the company has grown to become one of the leading players in the food delivery industry. In this section, we will delve into Grubhub’s market share in the food delivery industry and how it has influenced its growth over the years.
- Market share: Grubhub’s market share in the food delivery industry has constantly been on the rise. In 2021, the company’s market share in the online food delivery market segment in the United States stood at 23.7%, making it the second-largest player in the sector. This statistic reveals the massive impact Grubhub has had on the food delivery industry.
- Competitive landscape: Grubhub’s dominance in the food delivery industry doesn’t go unchallenged as it faces stiff competition from other players. DoorDash, for instance, holds the largest market share of 57.3%, while Uber Eats follows Grubhub with 22.8%. However, Grubhub’s market share keeps growing, thanks to its strategic acquisitions and expansion plans.
- Growth prospects: As consumers shift their preferences towards online food delivery platforms, Grubhub is poised for significant growth in the foreseeable future. In 2020, the company reported revenue of $1.8 billion, which was a 39% increase from the previous year, and it is expected to continue its upward trajectory with the increasing demand for food delivery services.
The takeaway
Grubhub, with its increasing market share in the food delivery industry, has disrupted traditional food delivery services and given consumers what they want, convenience. As the company continues growing and gaining popularity, it will undoubtedly play a crucial role in shaping the future of the food delivery industry.
Grubhub’s market share in the food delivery industry – Key statistics table
| Year | Grubhub Market Share (%) | DoorDash Market Share (%) | Uber Eats Market Share (%) |
|---|---|---|---|
| 2021 | 23.7% | 57.3% | 22.8% |
| 2020 | 23.2% | 45% | 30% |
| 2019 | 32.2% | 33.8% | 21.2% |
The above table showcases the fluctuations of Grubhub’s market share in the food delivery industry over the years. Despite facing stiff competition from other players, Grubhub has managed to maintain a significant market share and grow its revenue consistently over time.
Factors Affecting Grubhub’s Profitability
As an industry leader in food delivery, Grubhub has shown tremendous growth over the years. But just how much money does Grubhub make? There are several factors that affect its financial performance. Here are some of the major factors:
Market Competition
- The food delivery industry is highly competitive, with dozens of companies vying for a share of the market. This competition can drive up advertising and promotional costs, as companies fight for market share.
- New entrants in the market can also squeeze Grubhub’s margins, especially if they offer more competitive pricing models or better services.
- To remain competitive, Grubhub has to invest heavily in technology and innovation to enhance the customer experience, which can impact its bottom line.
Operating Expenses
Like any business, Grubhub incurs significant operating expenses that impact its profitability:
- Employee salaries and benefits
- Marketing expenses
- Technology and infrastructure costs
- Insurance and legal fees
Commission-based Model
Grubhub earns revenue by taking a commission from orders placed through its platform. While this model can provide steady streams of income, it also comes with some risks:
- Grubhub’s income is tied to transaction volumes and total order values, which can fluctuate depending on market conditions and seasonality.
- Grubhub’s commission rates are subject to negotiation with restaurant partners, which can lead to lower profit margins if competitors offer better terms.
Revenue and Profit Growth
Over the years, Grubhub has experienced impressive revenue and profit growth:
| Year | Revenue (millions) | Net Income (millions) |
|---|---|---|
| 2018 | 1,501.16 | 131.07 |
| 2019 | 1,318.41 | 6.23 |
| 2020 | 1,804.32 | -9.16 |
However, recent years have shown a decline in profitability due to increased competition and operating expenses. Grubhub’s ability to adapt to changing market conditions and cost structures will determine its financial success in the future.
Grubhub’s Advertising and Marketing Strategy
Grubhub, as one of the premier food delivery services in the US, has managed to build a strong brand that is synonymous with convenience and speedy food delivery. Much of this is owing to their advertising and marketing strategy, which has helped them reach and attract a large and loyal customer base. Their advertising and marketing strategy is well thought out, targeted, and designed to increase their brand visibility, making them the go-to choice for hungry customers. Here are some of the ways Grubhub has established itself as a brand.
- Promotions, Discounts, and Coupons: One of Grubhub’s primary marketing strategies is offering promotions, discounts, and coupons to its users. They strive to make their service affordable while also maintaining a competitive edge over their rivals. The discounts and promotions are strategically timed to coincide with key holidays, events, and seasonal periods. Whenever there is an occasion such as Halloween, Christmas, or Thanksgiving, Grubhub offers discounts and promotions to its users to encourage them to order food through their platform.
- Referral Programs: Grubhub incentivizes its users to refer their friends and family members to use their service. Whenever a user successfully refers a friend or family member to Grubhub, they receive a credit that can be used to offset subsequent orders. This referral program is effective in promoting the platform, while also generating customer loyalty.
- Social Media Marketing: Grubhub has a strong presence on various social media platforms, including Facebook, Twitter, and Instagram. They use these platforms to engage with their followers by sharing photos of food, promoting new offerings, and encouraging user-generated content. The platform has over 965,000 followers on Twitter and over 201,000 followers on Instagram, providing them with a massive audience for their marketing campaigns.
Grubhub’s Advertising Budget
Grubhub’s advertising and marketing budget has grown over the years as it continues to maintain its dominant position in the meal delivery industry. In 2019, Grubhub spent over $245 million on advertising, up from $207 million in 2018 and $140 million in 2017. Grubhub has been aggressive in its advertising spending, allowing them to establish a massive brand presence in the market.
| Year | Advertising Spending (in Millions) |
|---|---|
| 2019 | $245 |
| 2018 | $207 |
| 2017 | $140 |
Despite the massive advertising and marketing costs, Grubhub has managed to maintain a strong ROI on its ad spend, making it a sound investment.
Grubhub’s Partnerships with Restaurants and Third-Party Delivery Companies
One of the key factors behind the success of Grubhub is its extensive network of partnerships with restaurants and third-party delivery companies. These partnerships enable Grubhub to offer a wide variety of food choices to its customers while also allowing restaurants and delivery companies to tap into Grubhub’s extensive customer base.
Here are some of the ways in which Grubhub’s partnerships work:
Partnerships with Restaurants
- Grubhub partners with thousands of restaurants across the United States, ranging from small, independent eateries to large, chain restaurants.
- Restaurants that partner with Grubhub benefit from increased exposure to customers who may not have previously known about their establishment.
- Restaurants can also take advantage of Grubhub’s marketing expertise and resources to reach more customers and increase sales.
Partnerships with Third-Party Delivery Companies
Grubhub also partners with third-party delivery companies to expand its delivery capabilities and reach even more customers. Some examples include:
- Seamless: Grubhub acquired Seamless in 2013, which brought in a large pool of delivery drivers and expanded its reach in major metropolitan areas.
- Uber Eats: In 2020, Grubhub announced a partnership with Uber Eats, allowing customers to order from both platforms on either app.
- Postmates: Grubhub acquired Postmates in 2020, which expanded its delivery network and enabled it to compete more effectively with other food delivery giants like DoorDash and Uber Eats.
Benefits of Grubhub’s Partnerships
Partnering with restaurants and third-party delivery companies has numerous benefits for Grubhub:
- Increased revenue: Grubhub earns revenue through fees charged to restaurants and delivery companies for its services.
- Expanded reach: Grubhub’s extensive network of partners allows it to reach more customers and offer more food choices.
- Brand recognition: By partnering with well-known restaurants and delivery companies, Grubhub improves its brand recognition and credibility.
Conclusion
Grubhub’s partnerships with restaurants and third-party delivery companies are a crucial component of its success. They enable Grubhub to offer more choices to customers, expand its delivery network, and increase revenue. By continuing to form new partnerships and expand its reach, Grubhub is well-positioned for continued growth in the highly competitive food delivery industry.
| Year | Revenue |
|---|---|
| 2016 | $493.2 million |
| 2017 | $683.1 million |
| 2018 | $1.0 billion |
Source: Statista
Grubhub’s International Expansion and Revenue Growth
Grubhub is an online food ordering and delivery company that operates in more than 4,000 cities across the United States and London. However, Grubhub has also been expanding its international reach by acquiring companies from other countries such as Foodpanda from Germany.
- Grubhub acquired Foodler, a Boston-based online food ordering company, in June 2017.
- Grubhub purchased Eat24, a food delivery platform, in 2017 for $287.5 million. The acquisition helped Grubhub to expand its reach to 1,600 cities across the United States and Canada.
- In 2018, Grubhub acquired LevelUp, a restaurant technology company, for $390 million. The acquisition provided Grubhub with an opportunity to build an end-to-end solution that could compete with other food delivery services.
With the company’s international expansion, Grubhub’s revenue has been steadily growing. In 2019, Grubhub reported revenue of $1.3 billion, a 49% increase from its 2017 revenue of $860 million. Grubhub’s net income also increased from $74 million in 2017 to $310 million in 2019.
Grubhub’s biggest competitors in the food delivery space are Uber Eats, DoorDash, and Postmates. However, Grubhub’s strong brand recognition and its partnerships with restaurants have helped it maintain its position as one of the industry leaders. Grubhub also offers a robust rewards program that allows customers to earn points for every order they place, which can be redeemed for discounts on future orders. In addition, Grubhub has expanded its services to include catering and other business-related services.
| Year | Revenue | Net Income |
|---|---|---|
| 2017 | $860 million | $74 million |
| 2018 | $1.0 billion | $154 million |
| 2019 | $1.3 billion | $310 million |
Grubhub’s international expansion and revenue growth have solidified its place in the food delivery industry. With its strong brand recognition, partnerships with restaurants, and rewards program, Grubhub is well-positioned to continue competing against other major players in the space.
Grubhub’s financial performance during the COVID-19 pandemic.
The COVID-19 pandemic has affected many businesses, not excluding the food delivery industry. However, Grubhub’s financial performance during the pandemic has been impressive. Here are some figures that show how well the food delivery company has been doing:
Revenue Growth
- In Q2 2020, Grubhub’s revenue grew by 41% year-over-year to $459 million.
- The company’s revenue increased by 52% in Q3 2020 to $494 million.
- The fourth quarter of 2020 saw Grubhub’s revenue hit $552 million, representing a 39% increase from the previous year.
Market Share
Despite facing stiff competition from other food delivery companies, Grubhub has maintained its position as one of the market leaders.
- According to data from Second Measure, Grubhub’s market share increased from 26% to 33% between March and September 2020.
- In Q4 2020, Grubhub reported that its active diners increased by 39% year-over-year to 31.4 million.
Profit and Loss
Grubhub’s financial performance during the pandemic has been mixed when it comes to profits and losses. The company has experienced both gains and losses, depending on the quarter.
- During Q2 2020, Grubhub reported a net loss of $33.4 million, compared to a net income of $1.2 million in the same quarter of the previous year.
- In Q3 2020, the company returned to profitability with a net income of $38 million.
- However, the fourth quarter of 2020 saw Grubhub report a net loss of $16.5 million.
Conclusion
Overall, Grubhub’s financial performance during the pandemic has been impressive, with the company recording steady revenue growth and gaining more market share. Despite facing some losses in some quarters, the food delivery giant seems to be well positioned to weather any challenges brought about by the pandemic.
| Quarter | Revenue | Net Income/Loss |
|---|---|---|
| Q2 2020 | $459 million | $-33.4 million |
| Q3 2020 | $494 million | $38 million |
| Q4 2020 | $552 million | $-16.5 million |
Sources: Grubhub Q2 2020, Q3 2020, and Q4 2020 Earnings Reports
Frequently Asked Questions: How Much Money Does Grubhub Make?
1. How does Grubhub make money?
Grubhub makes money through commissions on orders made through their platform, as well as fees charged to restaurants for using their services.
2. How much revenue does Grubhub generate?
In 2020, Grubhub generated $2.4 billion in revenue.
3. How profitable is Grubhub?
Grubhub’s profit margin is currently around -14%, meaning they are not currently profitable. However, they have plans to increase efficiency and cut costs in order to reach profitability.
4. How much does Grubhub charge restaurants?
Grubhub charges restaurants a commission fee of 10-30% on each order, depending on the level of service provided.
5. How has Grubhub’s revenue grown over time?
Grubhub’s revenue has steadily increased over the years, with the exception of a dip in 2020 due to the COVID-19 pandemic. However, they are expected to rebound and continue growing.
6. What is the future outlook for Grubhub’s revenue?
The future outlook for Grubhub’s revenue looks positive as they continue to expand their services and partnerships with restaurants and other businesses.
Closing Thoughts
Thanks for taking the time to read up on how much money Grubhub makes. While their profit margin may not currently be in the black, they have a strong revenue stream and a promising outlook for the future. Don’t forget to check back for more updates on this and other topics!