Rub a Dub Dub Thanks for the Grub
Is GrubHub CEO, Matt Maloney, full of - great ideas to make online food ordering the best experience its ever been? It sure seems that way, with investors betting on the stock and driving it up 75% in the last year. Grubhub makes restaurant pick up and delivery seamless. The company even owns the popular app Seamless which allows hungry eaters to select from a list of restaurants that can delivery and then select from an online menu.
The beauty of the online menu is that it can be different than that restaurants actual menu and be tailored towards items that delivery easily and more effectively. While this seems like an obvious concept, that restaurant business has surely been slow to catch on. It used to not make much sense for companies with sandwiches, subs, wings, and smaller fast food items to deliver, but surprisingly they seem to be listening to their customers and joining in on the trend.
Food delivery is growing at a phenomenal pace and GrubHub has reported 21% user growth and 50,000 restaurant partners. This scale gives the company pricing power and restaurants are paying up to be listed on GrubHub's platform. Some bearish analysts say that online delivery will stifle restaurants, but Maloney disagrees:
"I think there's a massive opportunity for restaurants... After a year, restaurants that are on GrubHub see 35% more sales."
Many restaurants are taking a hit on margins due to not being able to sell that extra alcoholic beverage while people are waiting at their seats. While some municipalities do deliver alcohol, it still seems to be worth it for these restaurants to join GrubHub if they see such an expansion of sales, despite missed revenue from drinks.
GrubHub has seen 40% revenue upside and 78% YoY profit growth.