By Tom Kaiser
After forking over for Foodler in June, Grubhub purchased Eat24 from Yelp for $287.5 million, further solidifying its status as the leading provider of third-party food delivery. Investors celebrated Grubhub’s soon-to-be expanded menu and possibilities of the ongoing partnership with Yelp, skyrocketing the shares of both companies in the days following the announcement.
“With such complementary goals and strengths, Jeremy (Stoppelman) and I are excited to form a partnership that will allow each company to focus on its respective expertise, while working together to expand local e-commerce for diners and restaurants,” said Matt Maloney, Grubhub’s founder and CEO. “Adding Eat24’s large diner base and thousands of restaurants to our platform will accelerate Grubhub’s mission to become the most comprehensive marketplace connecting takeout diners and restaurants. The long-term agreement ensures that Grubhub also has access to Yelp’s enormous user base and clear content leadership to help drive more diners to our restaurants.”
Jeremy Stoppelman, Yelp’s co-founder and CEO, sent out a positive message as well, saying the partnership would be “a win for everyone.”
As part of the partnership Grubhub will pay a “fair referral fee” to Yelp for any order generated on the platform. In addition, when Grubhub has restaurant inventory on Yelp, it will be the preferred delivery provider. For restaurants, the combined entity will offer order taking on 75,000 restaurants.
In a statement provided to Food On Demand, Grubhub said the deal will allow it “to drive even more volume to a broader set of restaurant partners.” The company added that, like its merger with Seamless in early 2013, the Eat24 brand name would be retained into the “foreseeable future.”
Grubhub believes its scale will allow it to run more efficiently and more profitably than any of its competitors. “This resonates with our restaurant partners who don’t want their food held up by the logistical challenges of delivering iPods, toothpaste and groceries,” the statement said.
Because of Eat24’s strong presence on the West Coast, the partnership will boost Chicago-based Grubhub’s penetration in the all-important tech hubs of San Francisco, as well as second-tier markets like Miami and Seattle. The deal brings 15,000 more restaurants onto the Grubhub platform.
Looking forward, the company said it’s continuing to improve its delivery efficiency, along with further research on diner behavior, personalization and its support of its network of restaurant partners.