Convenience and immediacy continue to win over consumers—especially hungry ones craving for dinner or needing groceries. As the following Wall Street Journal article reports, Grubhub has been a pioneer in this on-demand market and looks for continued expansion.
Matt Maloney, founder and chief executive of Grubhub Inc an online and mobile food-ordering marketplace, spoke with Wall Street Journal Business Editor Jamie Heller about where restaurants and delivery are headed.
- HELLER:Grubhub shares have almost tripled over the course of a year. It’s a $12-billion-plus company. You had first-mover advantage. How do you keep capitalizing on that?
- MALONEY:We definitely had the first-mover advantage because we invented the category. We built these massive marketplaces where consumers would go online and find out which restaurants delivered to them, then place the order.
We realized that at the scale we were executing, we could do delivery far cheaper and far more successfully than the restaurants. And, by executing the scale and GPS mobile-enabled technology, we were able to inflect a step change in the efficiency of restaurant delivery. By doing that, we see the market continue to grow.
- HELLER:Where are you making your money? Delivery isn’t where the profits are for you, right?
- MALONEY:We started as a marketplace. We would charge 10% of whatever food we sold. We’re processing, like, $5 billion in restaurant food sales right now, annually, just in the U.S. We realized that doing delivery opened up a whole lot of demand. We could deliver further than the restaurants were willing to go. We could get new restaurants and expand into new areas.
Meal delivery services have become a big market and companies like Grubhub, DoorDash, and Uber Eats are stepping up to meet demand. Now, following on a similar business model, grocery delivery is gaining favor with consumers and major grocers like Kroger and Whole Foods are offering their own versions of mobile ordering fulfilled with either pick-up or delivery. What we see is another example of how an integrated mobile app that provides a seamless payment will win over customers. Throw in a loyalty program and targeted offers and watch the orders pour in.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group
