Investing in Diner-side: To maintain/drive scale, Grub’s operating model requires constant investment in diner acquisition. The Company makes re-ordering convenient by storing previous orders, preferences and payment information, helping to promote diner frequency and drive strong repeat business. GrubHub also provides diners with information and transparency about their orders and status and solves problems that may arise. The Diner Value prop: GRUB’s technology provides an intuitive and personalized platform that helps them search for and discover local restaurants and then accurately and efficiently place an order. Grub continuously invests labor, capital and IP to create value for BOTH SIDES of their network. Pathways to Just Digital Future Watch this tech inequality series featuring scholars, practitioners, & activists (2) Like many winner-take most internet marketplace models, SCALE is the key. I find this business model compelling because of its ability to simultaneously extract value from both sides of a co-dependent, two-sided market that is growing rapidly, at a highly profitable rate of 20% operating margins. Diners: GrubHub charges a small commission or ‘take rate’ to the consumer on a per transaction basis.Restaurant subs may choose their level of commission rate choosing a higher rate affects prioritization of a restaurant in Grub’s algorithm, generating higher page views similar to network businesses like AutoTrader. Restaurants: Grub Hub does not charge its network any upfront or subscription fees, but instead only gets paid commission per order generated, providing restaurants with a low-risk, high-return solution.The Business Model: Grub extract’s a commission rate from both sides of their network when they enable a takeout/delivery order. With >5MM monthly active diners and >30,000 restaurants, GrubHub has built a vibrant two-sided marketplace within a domestic takeout industry processing $67bn of transactions annually.1įor context, GrubHub went public in April 2014 and is currently a $2bn market cap company at a revenue run-rate of $340MM/yr, growing 30%+ per year, with 20% operating margins. GrubHub provides an online/mobile platform for restaurant pick-up and delivery orders.
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