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GrubHub IPO

Online Food Delivery Company Valued at $2 Billion

Written by Brian Hicks
Posted April 3, 2014

Anybody that knows anything about GrubHub (NYSE: GRUB) around here knows that it's looking to catch fire in the hot market for new tech IPOs.GrubHub logo

This week, the online food ordering company further stirred the pot when it amended its prospective IPO and raised its price range for its initial public offering to $23 to $25 per share.

That would give it a valuation just shy of $2 billion at its highest range, with nearly 80 million shares post-offering, according to Forbes. At its midpoint the IPO would still raise roughly $170 million and value the company just under $1.9 billion, up from a $1.7 billion value last week when GrubHub set a range of $20 to $22 per share.

If other tech companies are any indication as to how GrubHub will fare on its first trading day, it’s likely to soar at the jump. That’s the trend we’ve seen in recent months with other tech IPOs. While there have been a few duds, GrubHub is well-established compared to tech startups. It already services 600 U.S. cities and London, and has four sub-brands.

3 million shares will be offered up by insiders and venture capitalists that include Warburg Pincus, Thomas H. Lee Partners, Benchmark Capital and Goldman Sachs (NYSE: GS), according to Forbes. GrubHub co-founder and CEO Matt Maloney will be selling just under 500,000 shares, or about one-fifth of his stake in the company.

If that doesn’t ring your bell, take a look at GrubHub Seamless, a combined enterprise that was formed in August 2013, when Seamless merged with GrubHub. It operates under four brands that include GrubHub, Seamless, MenuPages (previously owned by Seamless) and Allmenus (previously owned by GrubHub).

This is important to note because executive decisions come from both organizations. Former co-founder and CEO of GrubHub, Matt Maloney, serves as CEO for the combined company, while Jonathan Zabusky, former CEO of Seamless, serves as president. It works like that down the line.

It should also be noted that GrubHub Seamless takes more than 150,000 customer orders daily and receives as high as a 17 percent cut from each order made through its online restaurant menu directory. The company sent more than $1 billion in gross food sales to local takeout restaurants last year.

That is one solid foundation.

What They Do

And while this write-up is about GrubHub and its IPO, GrubHub Seamless goes hand in hand, and together they are both flourishing.

As a separate entity, Seamless was launched in 1999, where it began as a corporate food ordering service in New York City. Eventually, it expanded into the consumer space and was acquired by Aramark (NYSE: ARMK) in 2006.

By 2012, Seamless split and was its own company.

GrubHub followed a similar path; founded in 2004, and in Chicago, the company has steadily sprawled across the country and over the Atlantic into London. They’ve singlehandedly been able to raise more than $80 million in venture capital funding. Now they’re set to go public.

It started with just two guys, Mike Evans and Matt Maloney, who after a few years and funding were able to move into Boston and San Francisco, and eventually New York, where they purchased Dotmenu, the parent company of Campusfood and Allmenu. Shortly after, they had a presence in more than 300 college campuses, and were hitting the big time in the nation’s biggest markets.

GrubHub’s core business today consists of an online food ordering service in nearly every metropolitan area here in the U.S. where you can order food from some of the best restaurants in the country.

The way it works: You visit the website and enter your address to make sure your area can receive delivery. If it does, next you will receive a list of partnered restaurants that will deliver food to your area. You can search by city, restaurant name, specific cuisine and other items. Each order is then tracked and monitored by a team of customer service agents to ensure quality and satisfaction. More recently, the same process can be used by the company’s mobile application.

And if it’s not in your neck of the woods already, it will be soon. GrubHub is a force that is tried and true, and it brings dinner right to you.

The IPO will prove Tuesday’s valuation.

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