Grubhub Grabs Profit by the Seams

GrubHub and Seamless have now merged into one company. Last year alone they collectively earned over $870 Million dollars in profit. GrubHub has Chicago origins while Seamless started in New York.  Mike Evans the co-founder of GrubHub and the newly combined companies COO said, “I’m excited about the expanded restaurant network that our diners will be able to use.”

The merge initially has many benefits, but over time there are very important executive decisions to make in order to optimize all dimensions of a quality service. One benefit is that combined they will operate in over 500 cities in the United States. They also decided to keep all 650 full-time employees. The former CEO of GrubHub Matt Maloney will remain CEO while the former CEO of Seamless Jonathan Zabusky will be president.  Both former companies have merged with much smaller organizations in the past. For example in 2011 GrubHub bought Dotmenu which gave them an extra 250,000 menu listings at different restaurants around the nation.

The company still has many decisions to make. One decision the company has yet to make is the name of the new brand. Perception is reality, and they should take very careful consideration of how to name the new brand. They have been heavy competitors in cities like Chicago for many years, and they have both built their own brands into what they are today. GrubHub did have more profit, and therefore it would be advantageous to keep that name over Seamless. Changing the name entirely is also an option. Since there whole process is derived from online use it is unlikely they will create a new name. For example if a family uses GrubHub or Seamless on a nightly basis, they will likely have the URL memorized or saved in their favorites. This means the new company needs to be very transparent and loud with their changes in order to retain the brand loyal consumers from both companies.  I have one recommendation if they decide to change the name of the company, and that is to buy a new website with the company name. Then link both former websites to the new website which on the surface seems like it would satisfice all the consumers. From there the new company needs to internally improve their servicing process.

After the merged company has chosen a conforming brand they should also merge the processes to optimize reliability. They can assume they will have a large impact in the market for online food ordering because separately they held large portions of the market share. It is likely that both former organizations had their own unique processes, but one standardized process would be most financially beneficial.

Do you think the new company should change their name? Or should they use GrubHub or Seamless as the new company name? Do you think they should standardize their processing systems? Overall do you think this merge is beneficial to the owners?

 Sources:

http://www.chicagotribune.com/business/breaking/chi-grubhub-seamless-20130520,0,4610644.story

15 thoughts on “Grubhub Grabs Profit by the Seams

  1. Personally, I have never used Seamless, but I have used GrubHub on numerous occasions, and while I can not speak for the majority, most of the people I associate with that live in Chicago use GrubHub as well. If my experience is indicative of a norm, the newly merged company would be better served to keep the GrubHub name and link the Seamless website back to GrubHub and announce the name change that way.

    Ultimately, this move should be one that is met with success for the two companies. As each company’s customer bases become comfortable with the situation, there should simply be less competition and thus more profit. Plus, the company should be able to focus less on pure advertisement since the merger will eliminate each company’s largest competitor (except for in the short run as they attempt to make the merger known to the public)and focus more on simply improving processes (GrubHub can occasionally have issues with orders not being correct or taking a very long time.

  2. Generally when companies merge they keep the name of the company that is more well-known or more profitable. Yes we all know GrubHub because it’s in Chicago, but Seamless has been profitable for New Yorkers. The question is which name is the most recognized? Combining names is always an option but the 2 names don’t flow together or relate to each other. It would sound weird to combine the 2. Since the above article says GrubHub has been more profitable, I would take the name GrubHub and perhaps have a slogan underneath it that says “the seamless way to order food.” The slogan contains the other name and it should be a different color or in bold. This way customers recognize the name and associate the names together.

    1. Great article and post!
      I agree with JTRKLA in that we know GrubHub because we are located in Chicago. At first, I was very hesitant with changing the name at all since both names are very recognizable in respective city. What I would do first is survey customers and ask their opinions. I think data is needed to make this decision, otherwise we are just speculating based on personal opinions.
      Otherwise, I like the use of the subhead to mention the other company’s name, as JTRKLA mentioned in his comment.

  3. I think this merge can be beneficial to both the companies. When deciding whether or not to change their name completely or use one of the existing, I would say use an existing name. Both GrubHub and Seamless are fairly well known names, so I think it would be too risky to change the name completely. You don’t want to risk loosing too many current customers, and too much change hurt them. Personally, I believe that GrubHub is more known than Seamless, so I would stick with their name and link Seamless’s old website to GrubHub’s.

  4. I agree with JTRKLA with the idea of keeping the name GrubHub while having a slogan that somehow incorporates Seamless into it. I don’t know if I’m biased because I am from Chicago, but I just personally like the name GrubHub better. With GrubHub being more profitable, they should use this as an advantage and strength, and continue to build their name and image up from there. I’ve never used Seamless before, but the new merged company should focus on improving their process system and making it convenient as possible for the consumers. Although the new name may be important, the processing system should be the priority in order to attract new customers and keep the current ones. Whether it be a new name, new process system or even both, this new company needs to make sure they let consumers know exactly what is going to happen.

  5. This post is especially interesting to me because I just had three interviews with GrubHub last week. I actually asked the person interviewing me about the competition they face with Seamless and he avoided the question… I guess this post kind of answers my questions. I think it will be extremely beneficial for them to merge. There is no sense in competing for restaurants, especially when a service like this brings in so much new business for restaurants. Thanks for the post.

  6. I really enjoyed reading this post on the merging between GrubHub and Seamless because I had always wondered which company had better sales and revenue. I have personally also only used GrubHub because I found the selection of restaurants was greater with GrubHub than with Seamless in my neighborhood. I believe the name for the company should be entirely new because it would indicate a new, fresh start for the merging company. I also agree with mhanson that there is absolutely no sense in competing for restaurants because this service brings in a great deal of business for all of these restaurants. I am very excited about this merge because this means the selection of delivery restaurants will be enormous. Thanks for the great post!

  7. Strategically, it is a brilliant idea to emerge both competitive companies to bring together an unstoppable force in the delivery/take out industry. However, I think that they do need to be mindful of each others model and who will ultimately win over customers with quality. GrubHub has to be careful in not forgetting that quantity will not overweight quality in the end, as many have never heard or used seamless before this acquisition.

  8. I personally think the merger is brilliant, but a name change for either organization would be a mistake. It is possible to merge their assets, customer base, and restaurant base without changing the name of the businesses. As stated in the post they could redirect all current internet traffic to a new combined web site listing both Grub Hub and Seamless on the header. The model I described is the exact model that Amazon and Zappos used when they merged together. Zappos remained completely independent of amazon but gained all of the assets amazon had to offer such as logistics and storage space. While amazon got the increased profits and benefited from the customer care culture Zappos had built.

  9. This makes complete sense. I have been following both companies since their inception. I believe Seamless came to the Chicago Land market because they saw how fast Grub Hub was growing. Their goal to come here was to merge and their marketing campaigns helped them get a higher user base. Their flash sales is a personal reason why I use Seamless, 15% off like every other week saves alot when there are order minimums from certain places that are actually good. Basically GrubHub has the right to stay GrubHub, it is a Chicago based startup and having spoken to founder, he is a genius. They will keep their name. The brand recognition has been followed religiously by users and switching the name would come with a whole new strategy and market presence. Rather then building on it and just saying, “Hey, we merged with Seamless” AKA we just took all their customers.

  10. This is a very interesting article. I agree that changing the name may not be the best thing for the company. Both of these names have gained most of the market share when it comes to food delivering services in their respective cities. The amount of sales that both of these companies made last year was very impressive. It’ll be interesting to see if these companies do as well when they merge. I think if these two companies make a successful merge and integrate both companies, that they will be even more successful as a partnership.

  11. This is a really surprising article because who would have though GrubHub and Seamless combining businesses. I think this is a smart move because now as a one company, they dominate most of the market and have gained a lot of market share. With smart phones growing, this is a business that will continue to boom. People do everything online now a days. I do not think they should change the name but instead keep both until they can slowly transition to a new name. By suddenly changing the name, it will create a lot of confusion. As of right now, I would keep both sites until they can announce and advertise the new name.

  12. I believe that for the first 30 to 60 days of the merger, grubhub.com and seamless.com should both work as they previously did, then redirect the customers to a new site of a determined name after this provisionary period. This will allow those who are unaware of the merger to use both sites as they previously did then to allow those who have not caught on to the change to be automatically redirected to the new site. I believe that customers will not care too much about the name as long as the services provided are the same as they were for both individual websites.
    In response to the company uniforming their processing procedure, I believe that it will be beneficial to both the customer and the company. Most processes are not too exaggerated nor are they tedious, therefore it is not going to cause too much of an imposition to the customer and will only limit the time spent on processing for the company.
    The company will prove beneficial to the company as it is able to consolidate its resources yet the employees of the company have retained their employment.

  13. I have used grubhub many times. Convenient,fast and it works when I am too lazy to walk out of my house. I think this merger will be a good thing for it and seamless.com. I am not sure aware of seamless.com but from the previous comments it seems to be a good match. Accordingly, I am excited with what will happen to both companies in the future. Solid article.

  14. I believe that if the company changes its name then it has a huge risk of losing a small number of customers. However that risk can prove very beneficial if the company wants to market the change to its current and potential new customers. Therefore, management needs to recognize these widows of opportunity and figure out which business model they want to go after.

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