Within the past few years, Grubhub has grown into one of the biggest food delivery services in the country.
So, if you’re wondering how the company managed to do this, we looked into how Grubhub makes money, and here’s what we found!
How Does Grubhub Make Money In [currentyear]?
Grubhub makes money through various fees it charges customers and restaurants in [currentyear]. Customers have to pay service fees when ordering. Restaurants have to give Grubhub a cut of the money they make from the platform. Grubhub does not make money from tips because those go in full to the drivers. Grubhub also makes money from Grubhub Plus premium subscriptions.
Continue reading to find out all you need to know about how Grubhub makes money, including how much it takes from restaurants, how much the restaurants make, and more!
What Percentage Does Grubhub Take?
Grubhub takes between 5% and 20% from restaurants on each order depending on which pricing package the restaurant chooses.
These fees are for advertising or marketing, which Grubhub charges for orders placed on its platforms (website or app) and are the primary source of revenue from restaurants.
Restaurants that get more marketing receive priority in search results, receiving more orders, but they have to pay a higher commission and vice versa.
If you find a restaurant on Grubhub but place an order either through its own website or by contacting it directly, Grubhub won’t know so it can’t take a cut from the restaurant.
There are three pricing packages on Grubhub, i.e. Basic, Plus, and Premium that offer different benefits and fees.
Grubhub also charges restaurants an order processing fee on credit card processing and fraud monitoring.
If a restaurant chooses to use Grubhub’s delivery network instead of its own, it’ll also be charged a 10% delivery fee.
Restaurants that have their own delivery network will only receive orders and the address of the customers, which they can use to get the food out to them without paying any of the delivery fees.
Grubhub’s supplementary delivery works with restaurants’ in-house delivery networks to complete orders that are outside their range by taking over mid-transit and charging a fee.
If a customer chooses to pick up their own food as opposed to having it delivered to them, the restaurant will not pay any delivery fees.
Grubhub doesn’t take any percentage from drivers’ tips, opting to let them keep 100% of what you give.
Is Grubhub Profitable?
Grubhub still isn’t profitable and neither is its Seamless subsidiary.
Grubhub has not revealed when it expects to be profitable but it likely won’t be soon because none of the other major food delivery services are profitable either.
Grubhub was bought in June 2020 by Just Eat Takeaway, a food delivery service based in the Netherlands, for over $7 billion.
This acquisition happened when the company was experiencing a period of rapid growth during the COVID-19 pandemic.
Since then, however, Grubhub has failed to meet expectations and Just Eat Takeaway is actually considering selling it off.
Just Eat CEO Jitse Groen said that the company’s focus in 2022 was profitability and strengthening its business, and this gives us a clue into how Grubhub is performing.
Do Restaurants Make Money From Grubhub?
Restaurants make money from Grubhub but how much they keep depends on the cut the company takes.
As stated above, Grubhub takes between 5% and 20% of every order based on the amount of marketing that has been done.
Grubhub takes a lower cut from restaurants it doesn’t promote on the platform, but these restaurants also get fewer orders as a result.
Conversely, restaurants that get more promotion on Grubhub and priority on searches receive more orders, but they also have to pay a higher commission for marketing.
Besides this, Grubhub also takes order processing fees and delivery fees, both of which cut into the amount that the restaurant will get at the end.
A recent report detailed allegations of Grubhub barring restaurants from charging less on other platforms, meaning they had to charge less for food but still deal with the fees.
How Much Money Does Grubhub Make?
Grubhub’s revenue over the past few years is as follows:
- 2010 – $8.5 million
- 2011 – $30 million
- 2012 – $60 million
- 2013 – $170 million
- 2014 – $253 million
- 2015 – $361 million
- 2016 – $493 million
- 2017 – $683 million
- 2018 – $1 billion
- 2019 – $1.3 billion
- 2020 – $1.8 billion
To know more, you can also read our posts on Grubhub refund policy, how much to tip Grubhub, and what times does Grubhub stops delivering.
Conclusion
Grubhub makes money through the fees it charges users, mostly service charges and delivery fees. Customers also have the option to pay for Grubhub Plus at a premium. Grubhub doesn’t make any money from drivers’ tips because drivers receive 100% of tips.
