GrubHub Buys Dotmenu, Altering Balance of Power With Seamless

In essence, we are down to two major online services (Seamless and GrubHub) that provide customers with an online/mobile system to order delivery and takeout from restaurants. The restaurants give Seamless or GrubHub a percentage of the order. In the past I have given a considerable amount of attention to Seamless (formerly SeamlessWeb) and little to GrubHub. But if you take the whole country into consideration, GrubHub’s reach is bigger than Seamless with more unique viewers. And after receiving $50 million in venture capital, they have grown overnight. GrubHub, flush with cash, swallowed up Dotmenu, which owns Campusfood, an ordering system specifically marketed to college students, along with Allmenus, a extensive database of menus. If you add to that the $20 million GrubHub received earlier this year, you can see how formidable GrubHub has become.

This deal put GrubHub in more markets than the 13 it operates from currently. In addition, GrubHub can build upon the success of Campusfood, funneling young educated adults into their ordering network. Because of the success of Campusfood on some campuses (marketing and brandwise), GrubHub would be wise to wait in dismantling Campusfood. Running parallel systems seems better. Acquiring Dotmenu also positions GrubHub to gain a fair share of mobile ordering as they target a demographic that lives off their phones. Indeed with Allmenus, GrubHub may make sense of the seemingly innumerable menu websites, which seem hard to distinguish.

What makes GRUBHUB different from SEAMLESS

This is a good chance to go into how GrubHub sizes up against Seamless. In price, GrubHub is normally cheaper (taking 10% of an order) than Seamless (taking between 12-15%). For the services they provide, I think that those cuts are a little steep. Traditionally, Seamless is better at obtaining corporate accounts.

Seamless’ website has a better user interface in general, especially during search. Seamless’ branding is also far superior; you wouldn’t think the way GrubHub looks that more than $200 million go through its website.

One of GrubHub’s biggest weaknesses is that they list restaurants who don’t have online ordering, so their numbers are inflated. When you find a restaurant without online ordering, you are given a phone number to call. Expecting to order online only to find a phone number is definitely aggravating.

Even though dominant, both GrubHub and Seamless were limited to major markets, but by buying Dotmenu, GrubHub suddenly has made inroads in many more urban areas. GrubHub knows that it’s always the hardest to get the first restaurants in a city to sign up. Being able to launch from college campuses where marketing is much easier gives GrubHub a chance to accumulate enough restaurants until it starts overflowing into other neighborhoods.

GrubHub, unlike Seamless, sells the ability to white-label their service, so you can run delivery and takeout from your restaurant. Surely, they aren’t the cheapest, but using other software precludes you from joining GrubHub.

If GrubHub is as savvy in gaining more users and restaurants as they were in getting funding, Seamless may not be invisible even in places they dominate like New York.