Grubhub Business Model Explained: How Grubhub Works and Makes Money

CREATED - August 15, 2025 | 53 Views


The on-demand food delivery industry has experienced explosive growth over the past decade, with apps like Grubhub leading the charge. As one of the pioneers in online food ordering, Grubhub has built a powerful platform connecting diners with local restaurants through technology.

But what exactly is the Grubhub business model? How does Grubhub work, and more importantly, how Grubhub makes money?

In this article, we’ll break down the Grubhub revenue model, explain how Grubhub works, and explore why it’s been so successful.

What Is Grubhub?

Founded in 2004, Grubhub is a U.S.-based online food ordering and delivery platform that connects customers with local restaurants. The platform allows users to browse menus, place orders, and get food delivered directly to their doorsteps.

Grubhub owns and operates several other brands including Seamless, Eat24 (formerly), and LevelUp. In 2021, it was acquired by Just Eat Takeaway, one of the world’s largest online food delivery marketplaces.

How Does Grubhub Work?

To understand how Grubhub works, let’s look at the basic workflow from a customer’s point of view:

1. User Registration and Location

Customers create an account and input their location to see nearby restaurants.

2. Browse and Order

Users browse restaurant listings, menus, ratings, and deals. Once they’ve chosen, they place an order through the app or website.

3. Payment

Customers can pay online using credit/debit cards, digital wallets, or promotional credits.

4. Order Processing

The restaurant receives the order and prepares the food. If the restaurant doesn’t offer delivery, a Grubhub delivery partner picks it up.

5. Delivery and Tracking

Customers can track their delivery in real-time. Once the order arrives, they can rate the experience.

This seamless system explains how Grubhub works to bridge the gap between hungry customers and local eateries.

Grubhub Business Model: The Aggregator and Logistics Approach

The Grubhub business model operates on a dual approach—marketplace aggregator and logistics provider. Here’s how:

1. Marketplace Aggregator

Grubhub lists restaurants that already have their own delivery staff. Grubhub facilitates the order, and the restaurant handles the delivery.

2. Logistics Provider

For restaurants that don’t have delivery, Grubhub provides its own fleet of drivers to complete the order. This model helps expand the platform’s reach and service availability.

Core Stakeholders:

  • Customers: Looking for food delivery from local restaurants.
  • Restaurants: Seeking to expand their customer base and increase orders.
  • Delivery Drivers: Independent contractors fulfilling delivery requests.

This hybrid model gives Grubhub flexibility to operate in various markets with different restaurant capabilities.

Grubhub Revenue Model: How Grubhub Makes Money

The Grubhub revenue model includes multiple income streams that fuel the company’s growth and sustainability.

1. Commission Fees from Restaurants

Grubhub charges restaurants a commission (typically 15%–30%) on each order placed through the platform. This is the company’s main revenue stream.

2. Delivery Fees from Customers

Customers pay a delivery fee, which varies based on distance, location, and promotional offers. Grubhub keeps a portion of this fee, especially when it provides the delivery service.

3. Marketing and Promotions

Restaurants can pay for higher visibility on the app via sponsored listings or promotions. Grubhub charges additional fees for these marketing services.

4. Service Fees

Customers often pay a service fee (separate from the delivery fee), which is added to the final bill. This fee helps cover operational costs.

5. Subscription Model – Grubhub+

Grubhub+ is a premium membership offering unlimited free delivery on eligible orders for a monthly fee. This subscription model creates a consistent revenue stream and improves customer retention.

6. Corporate Accounts

Grubhub also offers business solutions for companies that want to provide meals to employees, fueling a separate B2B revenue line.

Key Takeaways

Here’s a summary of how the Grubhub business model operates and drives revenue:

  • How Grubhub works: As a tech-driven platform that connects customers with local restaurants for online ordering and delivery.
  • Grubhub business model: A dual strategy—marketplace aggregator and logistics provider.
  • How Grubhub makes money: Commissions, delivery & service fees, marketing, subscriptions, and corporate partnerships.
  • Grubhub revenue model: Diversified income from both restaurants and customers, giving it financial flexibility and scalability.

Want to Build an App Like Grubhub?

If you’re inspired by Grubhub’s success and want to launch your own food delivery platform, Goteso can help. As a leading on-demand app development company, we specialize in building custom food delivery solutions that are scalable, secure, and feature-rich.

Our Solutions Include:

  • Customer, Restaurant, and Delivery Apps
  • Real-Time Order Tracking
  • Multi-Payment Gateway Integration
  • Admin Dashboard with Analytics
  • Loyalty & Referral Programs

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