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Chances are you’ve turned to Grubhub to satisfy your food cravings. For those unfamiliar, Grubhub is a leading global food delivery platform that has transformed the way we dine. Whether you’re a frequent user or just curious, prepare to dive into the financial mechanisms behind Grubhub.
Key Takeaways
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Grubhub primarily earns revenue by charging restaurants a commission fee, which constitutes the bulk of its income.
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Customers incur a delivery fee, most of which is allocated to Grubhub drivers.
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Restaurants can opt for premium placements through sponsored listings, boosting their visibility in search results.
What is Grubhub?
Grubhub is a comprehensive food delivery app that connects diners with local restaurants, facilitating pickups and deliveries by Grubhub drivers. Operating worldwide, Grubhub features over 300,000 restaurants within its platform.
How Does Grubhub Make Money?
Understanding the Grubhub business model is essential. The revenue generation process can be simplified into three key components. First, Grubhub collects a commission fee from restaurants, typically ranging from 5% to 20%, with an average around 12.5%. This is where the majority of Grubhub’s income originates.
Secondly, Grubhub benefits from delivery fees charged to diners. While this fee is standard for food delivery, it’s important to note that approximately 80% of these fees go directly to the delivery personnel.
The third revenue stream involves additional commissions from marketing services. Restaurants can purchase sponsored listings, which enhance their visibility in search results, with extra fees ranging from 2.5% to 17.5% based on their ranking.
Ultimately, restaurants have the flexibility to choose their commission structure, but lower commission rates result in less favorable search placements.
Tell Me More (Like Does It Have a Car?)
Founded in 2004 in Chicago, Grubhub has been pivotal in linking diners with local takeout options. The app features over 300,000 restaurants and partners with more than 155,000 of these establishments across over 3,200 cities in the U.S. and London.
Processing around 500,000 daily orders, Grubhub facilitated $6 billion in food sales to local restaurants last year. Currently, more than 22 million diners actively use the platform.
The Grubhub brand encompasses several services, including Grubhub, MenuPages, Seamless, LevelUp, AllMenu, and Tapingo, offering a wide selection of dining options available 24/7. Users can easily track their orders in real-time, all from the comfort of their homes.
For restaurants, Grubhub boosts visibility and provides its own delivery workforce, allowing establishments to focus solely on preparing meals once an order is placed.
How Does Grubhub Operate?
To order food, simply download the app or visit Grubhub’s website. Enter your zip code or address in the search bar, and the app will display a list of restaurants within your delivery area. You can browse through options or filter by cuisine type.
After selecting a restaurant, place your order by providing your address and deciding whether to have it delivered or to pick it up. Once payment is made, Grubhub sends the order to the restaurant and a delivery person picks it up to complete the delivery.
How Much Do Grubhub Drivers Make?
Grubhub’s competitive landscape includes its merger with Seamless in 2013, resulting in one of the largest delivery services in the U.S. While the pay may not be substantial, it can exceed minimum wage; however, working full-time may still require supplemental income.
Grubhub drivers typically earn between $10 and $23 per hour, translating to an annual salary of approximately $22,894 to $48,960 based on a standard workweek. Additionally, Grubhub drivers receive 100% of their tips, which amounted to $2.5 billion in the previous year.
Grubhub vs. DoorDash: Which is Better?
When comparing Grubhub to DoorDash, Grubhub often comes out on top due to its extensive restaurant availability and user-friendly interface. Unlike DoorDash, Grubhub allows browsing without requiring account creation, and its delivery fees are generally lower, as you only pay what the restaurant charges.
However, some partner restaurants may enforce minimum order amounts, which could lead to higher total costs if you’re opting for a small meal. Customer service is another strong point for Grubhub, offering robust support options, including a clearly marked customer support number and 24/7 live chat, which often outshines DoorDash’s more limited offerings.
Grubhub FAQ
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What percentage does Grubhub take?
Grubhub takes a commission of 5-20% on each order, with restaurants able to select from various pricing packages that influence the commission rate. Higher percentages typically provide restaurants with increased visibility and enhanced customer service.
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Do Grubhub drivers get paid or just tips?
Grubhub drivers receive a base hourly rate plus tips, which can vary widely. Generally, drivers make between $10 and $23 per hour and keep 100% of their tips from deliveries.
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Does Grubhub pay for mileage?
No, Grubhub does not reimburse drivers for mileage or fuel costs, so potential drivers should consider these factors when deciding to work for the platform.
Author
Amanda Postma is a writer for the Zippia Career Advice blog with a focus on creating entertaining content to help you through your job search. She received her BA from the University Of Missouri-Columbia.
