The two biggest platforms in online food ordering, Grubhub and Seamless, announced Monday that the two startups will merge. The merged company will have over a $100 million in yearly revenue and more than 20,000 participating local restaurants. The new company will be in 500 cities and handle almost a billion dollars of food orders per year.
Since Grubhub and Seamless were the main rivals for the online food ordering market, the new company, (so far unnamed) will be much bigger than its nearest competitor. The merged company will benefit from the strengths of both startups. NYC-based Seamless is known for their corporate accounts, while Chicago-based Grubhub is the leader in ordering by college students. However, both have branched out into the consumer market and are not reliant on any one demographic group.
The merger is on level terms and not an acquisition, so shareholders will pool their stakes into the new company. The new merged company will continue as separate brands. Both have separate websites and mobile applications. It is unclear what technologies will be shared or any new changes. The merged company will not have a headquarters in any one city as Seamless and Grubhub are firmly set in New York City and Chicago respectively. The leadership positions will also be split between both Grubhub’s and Seamless’ executives.
This move might have something to do with an IPO down the road as the results from Facebook and Groupon IPOs have been mixed. With Grubhub and Seamless merger, they will not have any competitors of the same reach or size. Whether this merger has an effect on restaurants or customers is hard to gauge at this point. We will keep you informed.
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