Grubhub

Grubhub Inc. is an American online and mobile prepared food ordering and delivery platform that connects diners with local restaurants. The company is based in Chicago, Illinois and was founded in 2004. As of 2019, the company had 19.9 million active users and 115,000 associated restaurants across 3,200 cities and all 50 states in the United States.[2][3][4] Grubhub Seamless went public in April 2014 and is traded on the New York Stock Exchange (NYSE) under the ticker symbol "GRUB".[5]

Grubhub Inc.
Formerly
GrubHub Seamless Inc.
(2013–2014)
Public
Traded as
IndustryOnline platform for restaurant pick-up and delivery
Founded2004 (2004)
Founder
  • Matt Maloney
  • Mike Evans
HeadquartersChicago, Illinois, U.S.
Area served
United States
Key people
RevenueIncrease US$1.31 billion (2019)
Decrease US$−6.28 million (2019)
Decrease US$−18.57 million (2019)
Total assetsIncrease US$2.37 billion (2019)
Total equityIncrease US$1.49 billion (2019)
Number of employees
Increase 2,773 (Jan. 22, 2020)
SubsidiariesBiteGrabber
Eat24
LevelUp
Seamless
Tapingo
Websitegrubhub.com
Footnotes / references
[1]

On June 9, 2020, Just Eat Takeaway, a European food delivery service, announced an agreement to buy Grubhub for $7.3 billion in stock.[6]

HistoryEdit

Grubhub historyEdit

Chicago-based Grubhub was founded in 2004 by Mike Evans, Roman Gaskill, and Matt Maloney, to create an alternative to paper menus.[7] Two years later, in 2006, Maloney and Evans won first place in the University of Chicago Booth School of Business's Edward L. Kaplan New Venture Challenge with the business plan for Grubhub.[8]

In November 2007, Grubhub secured $1.1 million in Series A funding, led by Amicus Capital and Origin Ventures for the purpose of expanding into San Francisco and New York markets.[9] In March 2009, Grubhub earned $2 million in Series B funding, led by Origin Ventures and Leo Capital,[10] which was followed by $11 million in Series C funding, led by Benchmark Capital in November 2010.[11] $20 million in Series D funding was raised (led by DAG Ventures) in March 2011.[12]

Grubhub's portfolio of brands includes Seamless, AllMenus, MenuPages, LevelUp, and Tapingo. Seamless is an online and mobile food ordering platform for regional restaurants active in the U.S. and London.[13]

In September 2011, Grubhub secured $50 million in Series E funding and acquired New York-based competitor Dotmenu, the parent company of Allmenus and Campusfood.[14] Grubhub completed the acquisition of AllMenus that month.[15] MenuPages was acquired by Seamless in September 2011.[16]

DiningIn, an online ordering and food delivery company based in Brighton, Massachusetts, was acquired by Grubhub in February 2015.[17] Restaurants on the Run, a corporate food delivery company based in Aliso Viejo, California, was acquired by Grubhub in February 2015.[18]

In December 2015, Grubhub acquired Delivered Dish, a restaurant delivery service in seven markets across the Pacific Northwest and Southwest, including Denver, Las Vegas, San Diego, Portland, El Paso and Albuquerque.[19][20] LAbite, a Los Angeles-based restaurant delivery service, was acquired by Grubhub in May 2016.[21]

In August 2017, Grubhub entered into an agreement to acquire Eat24 from Yelp for $287.5 million, subject to regulatory review.[22] In October 2017, Grubhub announced that had it completed its acquisition of Eat24.[23] In late 2018 Grubhub shut down the Eat24 brand.[24]

Certain assets were acquired from 11 franchisee-owned OrderUp markets in September 2018. Certain assets from 27 OrderUp markets had already been acquired in 2017.[25] GrubHub completed its acquisition of OrderUp in October 2018.[26]

LevelUp, a Boston-based diner engagement and payment solutions platform was acquired by Grubhub in September 2018.[25] The acquisition of LevelUp was for a reported or $390 million cash.[27] Tapingo, a San Francisco-based platform for campus food ordering was acquired by Grubhub in November 2018.[28]

By mid 2020, in the middle of the coronavirus pandemic where demand for services delivering food from restaurants and takeaways surged, Grubhub announced it was keeping its drivers safe by offering contact-free delivery as well as the option to order pickup for anyone who feels more comfortable getting the food themselves.[29]

Seamless historyEdit

In 1999, New York lawyer Jason Finger founded SeamlessWeb to provide companies with a web-based system for ordering food from restaurants and caterers. Six years later, in 2005, SeamlessWeb introduced a free ordering service to consumer diners to complement the existing corporate-ordering service.[30] In April 2006, SeamlessWeb was acquired by Aramark and integrated into its Food, Hospitalities, and Facilities segment.[31]

Jonathan Zabusky was named president of Seamless in 2009, and by June 2011, Seamless was re-privatized, as Boston-based Spectrum Equity Associates invested $50 million for a minority stake in the company from Aramark. The company then changed its name from SeamlessWeb to Seamless.[32]

In September 2011, Seamless acquired MenuPages,[33] and in February 2012, Seamless released an iPad app.[34]

Grubhub and Seamless mergerEdit

In May 2013, Grubhub and Seamless announced that they were merging, with Seamless representing 58% of the equity and GrubHub representing 42% of the equity of the combined business; the merger was finalized in early August 2013.[35]

IPOEdit

Grubhub went public in April 2014 at a price of $26 per share. It is traded on the New York Stock Exchange (NYSE) under the ticker symbol "GRUB".[36]

DeliveryEdit

In June 2014, Grubhub began offering delivery for restaurants that don't operate their own delivery service. As of 2016, the company was delivering in more than 50 markets across the U.S.[37] In July 2018, Grubhub announced that had it expanded its delivery capabilities to 28 new cities in the US.[38][39][40]

Grubhub's UK competitors are Deliveroo, Just Eat, and UberEATS. In the U.S. its competitors include Uber Eats, DoorDash, Postmates, EatStreet, Amazon Restaurants and Online Restaurants.[41]

In February 2020, the company announced the launch of its new Grubhub+ monthly subscription program, which offers free, unlimited food delivery from partner restaurants for monthly fee.[42]

Announced acquisitionEdit

On May 12, 2020, Uber announced that it was approaching Grubhub with a takeover offer.[43][44] However, on June 9, 2020, Just Eat Takeaway announced it would be purchasing Grubhub for $7.3 billion in an all-stock deal. [45] The acquisition would create the largest online food delivery service outside of China, and provide Just Eat Takeaway with a base in the U.S. market.[6] North American headquarters would remain in Chicago with Grubhub founder, Matt Maloney, joining the board of directors and heading North American operations.[46]

ControversyEdit

Labor lawsuitsEdit

Lawson vs. GrubhubEdit

In February 2018, US Magistrate Judge Jacqueline Scott Corley found that Grubhub correctly classified plaintiff Raef Lawson as an independent contractor and rejected his misclassification claim in the Lawson vs. Grubhub court case.[47]

In a 2017 lawsuit, attorney Shannon Liss-Riordan said that the company uses words such as “blocks” instead of “shifts" to re-label words and create a false narrative to justify its misclassification of drivers as contractors.[48]

Wallace v. Grubhub HoldingsEdit

The Wallace v. Grubhub Holdings contractor lawsuit alleges that Carmen Wallace and Broderick Bryant and other drivers were misclassified as independent contractors and Grubhub defied wage-and-hour requirements under the Fair Labor Standards Act, the Illinois Minimum Wage Law, and the California Labor Code.

The plaintiffs in Wallace v. Grubhub claim that the work of these drivers makes them employees rather than independent contractors. Wallace and Bryant argue that drivers work on scheduled shifts, and must work in certain area. "The drivers as a general matter cannot engage in personal non-work activities during their GrubHub shifts," the complaint states, meaning that they essentially function as employees. They also allege that they do not receive the same benefits that an employee does. Grubhub drivers are allegedly required to pay some of their own expenses. Because of how they are paid, the plaintiffs claim they may often get paid below federal or state minimum wage, even when they work long hours. Many drivers allegedly work more than 40 hours a week but do not receive overtime rates for their work.

According to the Grubhub contractor lawsuit, the company violated a number of FLSA and Illinois laws by failing to pay overtime and failing to pay minimum wage. The plaintiffs filed their class-action Grubhub contractor lawsuit on June 29, 2018, in the U.S. District Court for the Northern District of Illinois.

Misclassifying workers like Grubhub delivery drivers as independent contractors may allow a company to avoid paying minimum wage, overtime pay, health benefits, insurance, and social security costs. Workers improperly classified in this manner may feel the need to take Grubhub and other companies to court and pursue litigation.[49]

Broderick and Carmen filed the lawsuit on behalf of themselves and all others in a similar situation and the case is ongoing.

Phone order feesEdit

In 2019, the company was sued for charging restaurants fees for phone calls taking place on Grubhub-issued phone lines lasting over 45 seconds—whether they resulted in orders or not. Grubhub agreed to extend the refund window for restaurants that have been unwittingly charged for phantom orders. The restaurants themselves must review and audit call logs within the refund window in order to identify and dispute fees erroneously charged to them by Grubhub's algorithm.[50][51]

Political statementEdit

On November 10, 2016, after the victory of President Donald Trump in the general election, Grubhub President and CEO Matt Maloney sent a company-wide memo to employees saying that he rejected "nationalist, anti-immigrant and hateful politics of Donald Trump". The Washington Times reported that Maloney "unleashed a political screed after the Nov. 8 election and said that those who disagree with its anti-Trump views should resign."[52][53]

After a Twitter boycott campaign was initiated, Maloney later claimed his words were "misconstrued", adding "I want to clarify that I did not ask for anyone to resign if they voted for Trump. I would never make such a demand. To the contrary, the message of the email is that we do not tolerate discriminatory activity or hateful commentary in the workplace, and that we will stand up for our employees."[52] In a tweet that was later deleted, Maloney added: "To be clear, Grubhub does not tolerate hate and we are proud of all our employees - even those who voted for Trump."[53] By Thursday night, the hashtag #BoycottGrubHub was trending on Twitter.[54] Following Maloney's statement, on November 11, 2016, the company's shares dropped 5.93%.[55][54]

Referral numbers on Yelp listingsEdit

Reporting from an August 2019 episode of podcast Underunderstood found that Yelp listings for some restaurants provide Grubhub "referral numbers" which, when called instead of the restaurant's phone number itself, facilitate recording of the calls and can result in the restaurant being charged commission fees, even in some cases when resulting in no order.[56]

CybersquattingEdit

In June 2019, reports came out alleging that Grubhub had registered more than 23,000 web domains in restaurants' names without their consent, in what was cast as "an attempt to generate greater commission revenue and prevent restaurants from building their own online presences." Grubhub disputed the allegations, insisting that restaurants had explicitly agreed in their contracts with Grubhub to allow web domain purchases and the creation of websites advertising their businesses.[57][58]

Allegations of monopolistic behaviorEdit

In April 2020, a group of New Yorkers sued DoorDash, GrubHub, Postmates, and Uber Eats, accusing them of using their market power monopolistically by only listing restaurants on their apps if the restaurant owners signed contracts which include clauses that require prices be the same for dine-in customers as for customers receiving delivery.[59][60][61][62] The plaintiffs state that this arrangement increases the cost for dine-in customers, as they are required to subsidize the cost of delivery; and that the apps charge “exorbitant” fees, which range from 13% to 40% of revenue, while the average restaurant's profit ranges from 3% to 9% of revenue.[59][60][61][62] The lawsuit seeks triple damages, including for overcharges, since April 14, 2016 for dine-in and delivery customers in the United States at restaurants using the defendants’ delivery apps.[59][60][61][62] The case is filed in the federal U.S. District Court, Southern District of New York as Davitashvili v GrubHub Inc., 20-cv-3000.[63][59][60][61][62] Although a number of preliminary documents in the case have now been filed, a trial date has not yet been set.[64]

Allegations of listing without permissionEdit

In October 2020, a group of restaurants launched a class-action suit against Grubhub for having included them in its listings without having asked permission (or, in some cases, despite permission having been denied), on the grounds that this caused "damage to (the restaurants') reputations, loss of control over their customers’ dining experiences, loss of control over their online presence, and reduced consumer demand for their services"; plaintiffs specifically cited that Grubhub would list obsolete menus with invalid prices and/or unavailable options (leading to customer complaints), and that Grubhub refused to delist restaurants upon request.[65]

See alsoEdit

ReferencesEdit

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  5. ^ Fiegerman, Seth (April 4, 2014). "GrubHub Delivers Successful IPO as Stock Jumps 50% on Market Debut". Mashable.com.
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  13. ^ "About Us". Seamless Corporate Accounts. Retrieved 6 February 2019.
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  15. ^ "GrubHub Secures $50 Million and is Acquiring Campusfood and Allmenus". Reuters. September 21, 2011. Retrieved May 12, 2016.
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  17. ^ Castellanos, Sara. "GrubHub acquires Brighton online restaurant delivery service DiningIn". Boston Business Journal. Retrieved June 8, 2015.
  18. ^ "UPDATE 2-GrubHub goes direct to diners after acquisitions", Reuters.com, February 5, 2015.
  19. ^ Amina Elahi (December 7, 2015). "GrubHub acquires Delivered Dish of Portland, Ore". Chicago Tribune.
  20. ^ "GrubHub acquires Delivered Dish of Portland, Ore". Chicagotribune.com. Retrieved May 12, 2016.
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  27. ^ "Grubhub acquires payments and loyalty company LevelUp for $390M". Social.techcrunch.com. Retrieved 6 February 2019.
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  29. ^ Askinasi, Rachel (18 April 2020). "Here's how delivery services like Grubhub, Postmates, and Uber Eats are adapting to the coronavirus restrictions and safety precautions". Insider.
  30. ^ Tedeschi, Bob (June 13, 2005). "Ordering Takeout Online: A Dot-Com Idea Returns for a Second Try". The New York Times. Retrieved October 2, 2013.
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  32. ^ "ARAMARK Sells Stake In Online Food Ordering Service SeamlessWeb For $50M". TechCrunch.com. June 8, 2011. Retrieved November 14, 2016.
  33. ^ Brustein, Joshua (September 26, 2011). "Seamless Acquires Menupages in Race for Restaurants". The New York Times. Retrieved October 2, 2013.
  34. ^ Ludwig, Sean (February 28, 2012). "Seamless brings super simple food ordering to the iPad". Venturebeat.com. Retrieved October 2, 2013.
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  41. ^ Finance (2015-02-10). "Here's the big stat GrubHub's new competitors covet". Business Insider. Retrieved 2017-03-07.
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  46. ^ Jimenez, Abdel (June 10, 2020). "European food delivery firm to buy Chicago-based Grubhub in $7.3 billion deal". Chicago Tribune. Retrieved 2020-06-11.
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  59. ^ a b c d Allyn, Bobby (2020-05-14). "Restaurants Are Desperate — But You May Not Be Helping When You Use Delivery Apps". NPR. Archived from the original on 2020-05-17. Retrieved 2020-05-20. Frank points to a clause in the contracts restaurants and the food delivery apps agree to that prohibits owners from charging delivery customers more than people who dine in, even though delivery costs more. "By not forcing those purchasing on apps to bear the whole amount of the fees, instead forcing all menu prices to rise together, in-restaurant diners are effectively subsidizing Grubhub's high rates," said Frank, who argues such an arrangement is anti-competitive and illegal.
  60. ^ a b c d Baron, Ethan (2020-04-14). "DoorDash, Uber Eats, Grubhub and Postmates make restaurant meals cost more: lawsuit - Four firms' rise has 'come at great cost to American society,' suit claims". Mercury News. Archived from the original on 2020-04-20. Retrieved 2020-05-19. Each of the firms uses “monopoly power” to prevent competition, limit consumer choice and force restaurants to agree to illegal contracts that have “the purpose and effect of fixing prices,” the suit claimed. ... The four companies give restaurants a “devil’s choice” that requires them to keep dine-in prices the same as delivery prices if they want to be on the app-based delivery platforms, the suit claimed. And restaurants must pay commissions to the delivery firms ranging from 13.5% to 40%, the suit alleged. ... Establishments are forced to “calibrate their prices to the more costly meals served through the delivery apps,” the suit alleged.
  61. ^ a b c d Stempel, Jonathon (2020-04-13). "Grubhub, DoorDash, Postmates, Uber Eats are sued over restaurant prices amid pandemic". Reuters. Archived from the original on 2020-04-17. Retrieved 2020-05-19. GrubHub, DoorDash, Postmates and Uber Eats were sued on Monday for allegedly exploiting their dominance in restaurant meal deliveries to impose fees that consumers ultimately bear through higher menu prices, including during the coronavirus pandemic. In a proposed class action filed in Manhattan federal court, three consumers said the defendants violated U.S. antitrust law by requiring that restaurants charge delivery customers and dine-in customers the same price, while imposing “exorbitant” fees of 10% to 40% of revenue to process delivery orders. The consumers, all from New York, said this sticks restaurants with a “devil’s choice” of charging everyone higher prices as a condition of using the defendants’ services.
  62. ^ a b c d Dolmetsch, Chris (2020-04-13). "GrubHub, Doordash Accused in Suit of Pushing Prices Higher". Bloomberg News. Archived from the original on 2020-04-19. Retrieved 2020-05-19. The New York customers, who seek class-action status, say the delivery services charge “exorbitant fees” that range from 13% to 40% of revenue, while the average restaurant’s profit ranges from 3% to 9% of revenue, making delivery meals more expensive for eateries. “Restaurants could offer consumers lower prices for direct sales, because direct consumers are more profitable,” the plaintiffs said. “This is particularly true of dine-in consumers, who purchase drinks and additional items, tip staff, and generate good will.”
  63. ^ Davitashvili v GrubHub Inc., Link from NPR article (2020).
  64. ^ "Court Listener". 2020-07-28. Retrieved 2020-07-28.
  65. ^ Grubhub Hit With Lawsuit for Listing Restaurants Without Permission, by Jaye Saxena, at Eater; published October 28, 2020; retrieved October 30, 2020

External linksEdit