New ways to order in

The tech-centric find GrubHub

09/09/2009 10:00 PM

By KATIE ROGERS
Medill News Service

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Dining
A deflated economy inevitably finds fewer consumers eating out, but GrubHub.com co-founder and CEO Matt Maloney has found a sweet spot even in hard times by marketing home delivery to the tech- and social media-savvy.

“We processed $20 million in delivery orders last year,” Maloney said from GrubHub headquarters in Lincoln Park. “We’re probably going to triple that this year. It’s an incredible growth trajectory in the midst of a real economic recession.”

What started out as a business plan that won the University of Chicago alum the Edward L. Kaplan New Venture Challenge from the school in 2006 has grown into a 40-employee company with six locations in major markets across the country and 3,000 restaurant partners.

At first, customers would view the Web site and directly phone the restaurant with their orders. Now, customers have the option to order via the Internet.

GrubHub launched an iPhone ordering application in June 2008, believed to be the first of its kind released by any online food ordering company in the U.S., Maloney said. Although the iPhone has added to sales, he said the majority of orders still go through GrubHub via desktop computers.

The concept has resonated with consumers in the Chicago market. Resident Elizabeth Pirrie, 26, simply doesn’t have the energy to seek out meals when a point-and-click option exists. Convenience seems to trump the extra cost of having a meal delivered over making one at home.

“’I’m obsessed with GrubHub because I’m lazy mostly,” Pirrie joked. “Sad but true.”

Eventually, Maloney and GrubHub co-founder Mike Evans saw the draw of social media and the potential buying power of the tech-friendly consumer.

They hired Amy Le, GrubHub’s community social media manager, earlier this year. She operates GrubHub’s Twitter account, manages traffic on the company’s food blog and helps update its Facebook page.

“A lot of the users using GrubHub are very tech-savvy,” Le said. “So we had to engage with our users.”

Catering to time-crunched residents with new technology seems to be working, Maloney said. He admits that the concept of online food ordering has been around much longer than GrubHub – but making it the easiest for customers to use, he suggested, has been key.

“We didn’t invent the idea,” Maloney said. “It’s the execution is what it is. We hope that the customer will want to use online ordering because it’s simply easier.”

Maloney said there is no markup on restaurant menu prices once the menus are placed in GrubHub’s database. Restaurants pay what Maloney called a “small percentage” of the meal price each time an order is placed.

Don Ceaser, owner of Robinson’s #1 Ribs in Lincoln Park, joined GrubHub’s network in 2004. What started out as 75 to 80 orders taken by phone per month in 2004 has grown to 500 orders per month “in peak times” this year, Ceaser said. The restaurant’s deliveries are up by 1,400 this year, a 37 percent jump in business compared with last year.

Ceaser uses two other delivery services, GrubHub competitors Foodler.com and Delivery.com, along with an online ordering program built into the restaurant’s Web site. But when Ceaser does the math, he figures about 80 percent of his deliveries are generated through GrubHub.

“They’re probably the most effective marketing tool that I have,” Ceaser said. “At least with online services, I know what [ad revenue] is coming in, because I pay for what I get.”


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