Grubhub has been one of the biggest names in the food delivery industry ever since its founding & if you, as a restaurant, customer, or delivery partner, want to be a part of it, then you might be wondering, is Grubhub profitable?
From cut-throat competition from competitors like DoorDash and Uber Eats, Grubhub has been on a roller coaster ride.
In this article, you will find out how Grubhub makes money, how profitable it is, and how it compares to its competitors, among other things.
So make sure you do not skip anything.
What is Grubhub?
Grubhub is an online food delivery platform that allows users to order food online using their app from anywhere in their location.
It was founded in 2014 in Chicago, Illinois, and has a user base of 28.3 million with an extensive network of more than 300,000 restaurants in over 4000 cities in the United States.
As of now, the business is active in 1,600 cities across the UK and USA.
Keep on reading to find out is Grubhub profitable and other essential details.
Grubhub Cost
The pricing of Grubhub is based on two things: service fees and delivery fees, which make up 70% of the meal’s price.
- Grubhub’s service fees are the amount that it charges from the restaurant for facilitating the order.
- And the delivery fee is the amount that they ought to pay to the delivery driver for delivering the food.
Also Read: Is Owning A Boutique Profitable?
Is Grubhub Profitable?
In the first decade of the food delivery business, Grubhub and Seamless dominated the market and decided to merge in 2013, creating a powerhouse that had 70% dominance in the market.
As the new form of food delivery started to get popular, other brands like DoorDash, Uber Eats, etc., emerged in the market.
In the year 2015, Grubhub started losing its market share to DoorDash & Uber Eats, reaching a 20% market share up from 70%.
So is Grubhub profitable? As of 2023, Grubhub is not profitable, and the company has neither revealed if they expect to be profitable in the near future.
Grubhub was acquired by Just Eat Takeaway for $7 billion, but the company is planning to sell it off because of uncertainty in the improvement of its performance.
Grubhub Revenue Growth
Grubhub’s revenue has been increasing over the past years and here’s the data showing growth in Grubhub’s revenue since 2010:
Was Grubhub Ever Profitable?
Grubhub made profits for quite some years, but owing to the expenses of the company being more than the profits, in the past few years, Grubyhub has started incurring losses.
In regards with the profit and loss, this is how Grubhub’s performance has been till now:
| Year | Profit/Loss |
|---|---|
| 2013 | $4.3 million profit |
| 2014 | $24 million profit |
| 2015 | $38 million profit |
| 2016 | $50 million profit |
| 2017 | $90 million profit |
| 2018 | $78 million profit |
| 2019 | $18 million loss |
| 2020 | $155 million loss |
As you can see, Grubhub made a profit from 2013 – 2018, but in 2019, it incurred a loss of $18 million, followed by the biggest reported loss in 2020.
Although there has been an increase in the revenue of Grubhub, the company’s expenses are more than its income, and hence Grubhub is not a profitable company.
Grubhub Annual Gross Transaction Volume
Similar to the revenue, Grubhub’s annual gross transaction volume has been increasing consistently as well.
Grubhub Annual Users
Over the past two years, there has been a decrease in the number of Grubhub annual users.
Grubhub Annual Orders
In 2021, Grubhub completed over 288 million orders. However, in 2022, it saw its first annual decline in orders.
Grubhub Cities
Grubhub Restaurants
In 2022, there were a total of 333,000 restaurants that partnered with Grubhub.
Market Share of Grubhub Vs. Its Competitors
Have a look at the market share of Grubhub as compared to DoorDash, Uber Eats and Postmates.
How Does Grubhub Make Money?
The marketing strategy and revenue model of Grubhub is divided into four parts. Let us have a look at them:
Delivery Fee
One of the ways in which food delivery apps like Grubhub, DoorDash, etc., make money is from the delivery fee that they charge for getting the food delivered right to the doorstep of customers.
So how much does Grubhub charge to their customers for delivery? Grubhub’s delivery fee starts at 10% and goes up to 40% depending on the location and distance.
So the company receives anywhere between $0.99 and $12 from its delivery fees.
Commission Fee
Another major source of income for Grubhub is the commission fee of 12.5% that they charge on each deal.
The percentage of commission fee can range from 5% to 15%. However, 12.5% is their standard pricing.
This percentage is, however, shared by both Grubhub and the restaurant so that both parties can benefit from it.
Extra Commission/Marketing Fee
Grubhub charges an extra commission from restaurants to rank them higher, and it has nothing to do with the customers.
Grubhub charges extra commission lying in the range of 2.5%, 7.5%, and 17.5%, depending on the level of ranking.
Processing Fees
Apart from the above-mentioned fees, Grubhub also charges a processing fee of $0.30 and 3.05% from customers for placing an order through their app.
Is Grubhub Profitable For Restaurants?
Grubhub has its own benefits, but is Grubhub profitable for restaurants?
First of all, Grubhub has two types of listing options for restaurants: Sponsored and Unsponsored.
In a sponsored listing, the restaurant needs to pay a high commission (17.5%) to Grubhub to show their restaurant on top results.
And in an unsponsored listing, the restaurant is required to give slightly less part of their commission – up to 15%.
This might sound good, but by paying a low commission, Grubhub bury the restaurant ranking and make it almost invisible to users.
So just to remain on top of Grub’s app page, restaurants sometimes give up 40% of their order total, making it hard for the restaurant to make enough profits.
Such platforms also take up the flexibility and decision-making ability of the restaurant, which impacts their customer relationships as well.
Additionally, by using platforms like Grubhub, there is a risk of restaurants cannibalizing their own sales.
All of this leads us to believe that Grubhub is not very profitable for all restaurants but can be for a few depending on their Volume.
Example of an Hypothetical Order on Grubhub
To understand how Grubhub makes money, let us take an example:
Suppose you want food that costs $40. Then, Grubhub will charge you $0.99 per delivery plus a processing fee of $2.25.
The cost for Grubhub also includes a $5 delivery commission which is added to the order’s price.
Additionally, Grubhub also gives a 10% discount to new customers, lowering the order cost by $1.40.
So for food costing $40, you will pay a total of $46.84.
How much a Grubhub Driver Can Make?
| Grubhub Drivers | Estimate |
|---|---|
| Working Hours | 5 hours per day |
| Earnings per Day | $85 |
| Earnings per Month | $1,700 |
If you work 5 hours per day as a Grubhub driver, based on the average hourly rate of $17 mentioned earlier, your estimated earnings per day would be:
5 hours/day * $17/hour = $85/day
To calculate your earnings per month, assuming you work 5 hours per day for 20 days:
$85/day * 20 days = $1700/month
Please keep in mind that these figures are approximate and based on the average hourly rate and the assumption of working 5 hours per day consistently throughout the month. The actual earnings may vary depending on factors such as location, demand, tips, bonuses, and individual driver performance.
What Should You Consider Before Partnering With Grubhub?
Partnering with Grubhub comes with both benefits and drawbacks. Here are some points worth considering before you decide to partner with Grubhub as a restaurant:
- Grubhub charges a high price from restaurants to be a part of their platform.
- Although if you chose a non-sponsored listing, they would not cut a lot from your profits. But for a sponsored listing, expect to pay up to 17.5%.
- Since people get food delivered to their homes, there is a risk of not as many customers going to the brick-and-mortar location.
How Does Grubhub App Work?
Grubhub has an application that connects users, delivery guys, and restaurants making it easier to operate and finish orders.
Whenever an order is placed, timely notifications are sent to the delivery guy and the restaurant respectively.
Additionally, notifications about the order preparation, delivery timing, etc., are also sent to the customer.
Here is how Grubhub operates in four simple steps:
Step 1: Browsing
Grubhub features a plethora of restaurants on its app, and customers can use filters such as nearby, rating, cuisine, etc., to narrow down options and select the meal of their choice with ease.
Step 2: Placing an Order
Once the customer figures out the choice of the restaurant, the next step is to place an order. Grubhub offers various payment and delivery options to consumers for this.
Step 3: Food Preparation & Packing
After you place an order, the restaurant on the other side receives and starts preparing your order. Once your food gets ready, it is properly packed and sent out for delivery.
Step 4: Final Delivery
Now the restaurant hands over your food to the delivery guy, and the food gets delivered to you in the given time frame by Grubhub delivery drivers.
How Does Grubhub Benefit Restaurants & Consumers?
Both the restaurants and the consumers benefit from Grubhub. Let us have a look at them:
For users
- Users can order and get food delivered right from the comfort of their houses.
- Users get to choose from a wide selection of restaurants.
- Grubhub offers service 24×7.
- Once the order is placed, customers can track their delivery guy.
- Users can save a lot of time and energy by ordering food online.
For Restaurants:
- Restaurants get an extended customer base.
- They can send their own delivery guys to fulfill orders.
- They get to serve their regular customers and keep them happy.
Grubhub Key Statistics
- In 2022, Grubhub generated $2.4 billion in annual revenue, showing a 5% year-on-year increase.
- During this time, Grubhub’s gross transaction value also reached $10.1 billion.
- Grubhub has a restaurant partner network of over 300,000 restaurants in 4,000 cities.
- As of 2023, Grubhub has 28.3 million active users.
GrubHub Vs. DoorDash: Quick Facts
| Feature | DoorDash | GrubHub |
|---|---|---|
| Availability | 7,000+ cities | 4,000+ cities |
| Minimum requirements | 18 years old Car, bike, or scooter Personal background check | 19 years old Car, bike, or scooter. Personal background check. Checking account with direct deposit (to avoid instant deposit fees) |
| Weekly Pay Dates | Wednesday nights | Thursdays |
| Instant Debit Card Cash-out Cost | Fees apply | $0.50 (Free for Chase Bank customers) |
| Better For | Delivering in smaller cities and participating in challenges | Larger cities and college campuses |
Wrap Up
Grubhub has been seeing a growth in its annual revenue, but because since the company’s expenses are more than its income, the company is not profitable.
As such, the doubt about whether is Grubhub profitable becomes clear.
In this guide, we gave you a detailed account of Grubhub, including its sources of revenue, performance over the years, etc. We hope you found this useful.
FAQ’s
What is the number of people that Grubhub employs?
Grubhas has employed 2,750 full-time employees working for them.
Explain how Grubhub work for Restaurants?
There are majorly three benefits for restaurants that work with Grubhub:
- Grubhub does not ask the restaurant to apply any offers on its menu within the app.
- The company does not charge them upfront fees or anything in the name of a subscription.
- Restaurants are only required to pay Grubhub when orders from customers are generated.
How much percentage does Grubhub charge from restaurants?
Grubhub charges restaurant a fee of 5% to 15% for every delivered order.
Amit Gupta is an experienced expert in digital marketing and co-founder of DrFranchises. With more than 11 years of knowledge in franchise digital marketing, SEO, email marketing, and social media marketing, Amit has helped many brands achieve incredible success online. As a passionate entrepreneur and owner of 7 franchises, he continues to study franchise models, looking at costs, revenue, and profitability to guide brands toward profitable growth. When he’s not working on digital marketing, Amit enjoys spending time playing with his beloved dog.