Commentary

GrubHub And Seamless Cook Up A Merger

Take one from Column A (Seamless) and one from Column B – (GrubHub) and you got a heaping plateful of restaurant home-and-office delivery options once a merger announced yesterday clears regulatory approval and takes effect.

Under the hed, “GrubHub and Seamless Create Combo Platter,” the Wall Street Journal’s Shira Ovide writes: “GrubHub is known for its back-end technology to make effective online ordering at mom-and-pop restaurants, while Seamless has received plaudits for its mobile ordering apps.”

The AP’s Bree Fowler sums up the elevator pitch for both enterprises thusly on NBCNews.com: “The services appeal to diners by eliminating the need for a kitchen drawer of takeout menus, while also helping them discover new pickup and delivery options in their neighborhoods. Meanwhile, restaurants can benefit from new business and don't have to deal with as many phone orders, which can be labor intensive and prone to error.”

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Seamless dates its founding to 1 A.G. (After Google), or 1999. GrubHub goes back to 2004. Analysts are observing a lot of growth in services such as these.

“As our own Rip Empson pointed out on Friday, the tie-up is set to take place as the online food delivery and ordering space has begun to heat up,” writes TechCrunch’s Chris Velazco. “A handful of new startups have their respective eyes set on cracking the market (think ChowNow and HealthyOut, just to name a few), while more entrenched players like Delivery.com continue to putter along.”

The merger “essentially creates the Groupon of food delivery,” Empson writes. 

“The combined organization will enable diners and companies in more than 500 cities across the U.S. to order from more than 20,000 local takeout restaurants,” according to a joint statement. “In 2012, the online and mobile platforms of the two organizations sent approximately $875 million in gross food sales to local takeout restaurants, resulting in combined revenue well in excess of $100 million.”

The two companies “have been competitive in cities such as Chicago for several years,” points out Wailin Wong in the Chicago Tribune, but they “have different historical strengths. GrubHub is focused on the consumer segment of diners ordering food at home in the evenings, while Seamless got its start on the corporate side, connecting restaurants with employees who could expense their meals.” 

“This has nothing to do with cost savings; it has everything to do with increasing growth,” GrubHub CEO and co-founder Matt Maloney tells Bloomberg’s Douglas MacMillan. “We’re totally focused on the top line and how we continue to drive more orders for our restaurants.”

Maloney, a Chicago-based software engineer by trade, will be CEO of the new entity; Jonathan Zabusky, CEO of New York-based Seamless since 2011 and a University of California, Berkeley MBA, will serve as president. Brian McAndrews, a partner with Madrona Venture Group and currently an independent director at Seamless, will be chairman of a combined board on which “GrubHub and Seamless shareholders will both have significant representation,” according to the statement. 

“GrubHub is the best website in the history of websites.” according toGary of San Francisco,whose blurb is among those featured featured on the home page of the GrubHub website. “Totally rad service,” says Peter of Washington, D.C. (obviously caught to the max in the capital’s time warp). 

The Seamless home page is more strictly utilitarian –- enter address here, browse by cuisine there, click to download mobile app -- although it does link to “shout outs” from the likes of Bon Appétit, Fox Business, Redbook and Forbes and Mashable.

“Food delivery service Seamless knows about cold and flu season. Since 2013 began -- and flu germs really started flying -- Seamless has seen a 35% increase in chicken noodle soup orders compared to January 2012," writes Mashable’s Annie Colbert in one cited shout-out. And some customers request a heaping helping of compassion, too: “Please give him a hug. He is sick. Can you write a card? Please say: Roses are red. Violets are blue. I love chili all over you.”

Now that’s creative, old-school press agentry at work (by way of a release and blog post).

“The real question is how do we split the company amongst the two players,” Bill Gurley, general partner at Benchmark and a director on GrubHub’s board, wrote in a blog post cited by Bloomberg’s MacMillan. “Had they not started from day one of our discussions with a partnership mindset, we would have never have reached this milestone.”

The name and marketing strategy for the new entity will be established after the union clears regulatory hurdles,” Tiffany Hsu reports in the Los Angeles Times. And when might that be? she asks GrubHub spokeswoman Abby Hunt.

“As quickly as possible,” Hunt tells her in an email.

Just as long as it’s still hot when it arrives, right?

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