Food delivery pioneer GrubHub offers deals and freebies in honor of 20th anniversary

A pioneering tech company is celebrating its 20th anniversary this year, and no, it’s not Groupon.

From a humble origin story, Grubhub launched the multibillion-dollar U.S. online food delivery industry, which exploded in popularity during the pandemic, sating the cravings of locked-down consumers for everything from avocado toast to quesadillas.

For millions of Americans, especially millennials, who comprise nearly half the market, ordering dinner online has become part of their daily routine, thanks in no small part to Grubhub.

Founded in 2004 by Chicago software engineers Mike Evans and Matt Maloney as a way to move restaurant menus from the cluttered kitchen drawer to an organized website, Grubhub started with a single merchant — a now-closed Uptown Chinese restaurant — building what would become a national e-commerce platform. Then came a splashy IPO and eventually a buyout worth billions, the classic startup fairy tale.

But as growth slows in the post-pandemic landscape, Grubhub finds itself lagging behind competitors DoorDash and Uber Eats, owned by a Dutch-based company Just Eat Takeaway, which is trying to sell it, and looking to a new CEO to help it regain market share and its startup mojo.

“Grubhub invented the industry in North America,” said Grubhub CEO Howard Migdal, 37, a seasoned online food delivery executive who joined the company last year. “But the reality is, we have really good competitors and customers’ expectations are very high. And we need to meet and exceed those expectations to earn the trust of our customers.”

Two decades after changing the way consumers order restaurant delivery, Grubhub is celebrating its anniversary with a special promotion through the end of the month . Major national partners such as Taco Bell, Wendy’s, Panera, Pizza Hut, Popeyes and McDonald’s are each giving away 20,000 free items on designated days with minimum orders, adding everything from Big Macs to personal pan pizzas to delivery orders at no charge.

But like other groundbreaking Chicago tech startups, coming of age has been filled with challenges for Grubhub, which has seen annual revenue declines since peaking at the start of the pandemic in 2020. The broader food delivery industry has generated decelerating but continued growth.

Last year, North America revenue for Grubhub’s parent company, Just Eat, fell by 16% to about $2.3 billion, according to financial reports. Just Eat does not break down revenue for Grubhub, its largest North American holding.

Food delivery services saw a huge spike in revenue during the pandemic, jumping from $3.8 billion in 2019 to $8.5 billion in the U.S. after stay-at-home orders hit the following year, according to data from market research firm IBISWorld.

Revenue has continued to climb at a slower pace in the post-pandemic environment, with food delivery services projected to generate $13.9 billion in revenue this year, according to IBISWorld.

Total U.S. consumer spending on food delivery tops $90 billion per year, according to KeyBanc Capital Markets.

San Francisco-based leaders DoorDash has 67% and Uber Eats 23% of the meal delivery market, according to an April report by Bloomberg Second Measure. Grubhub is a distant third at 8% of sales, but is more competitive in its core markets such as Chicago and New York.

Grubhub works with 375,000 merchants in over 4,000 U.S. cities — the most of any food delivery service, Migdal said.

Since arriving in Chicago last year, Migdal has implemented both cost-cutting measures and initiatives aimed at reversing the revenue slide. Topping the top-line list is an expanded partnership with Amazon, which it has been working with since 2022.

In May, Amazon was granted rights to increase its existing equity stake in Grubhub up to 18% while enabling customers to order restaurant food delivery on its website. As part of the five-year deal, Amazon Prime shoppers were also given free Grubhub+ loyalty memberships, reducing delivery fees.

“We’re very proud of the Amazon partnership,” Migdal said. “Amazon is among the most customer-obsessed organizations in the world, and their goal is to give as much value to Prime members as possible. And they know restaurants is a very big category they currently don’t play in.”

A Detroit native and Michigan State graduate, Migdal co-founded GrubCanada in 2008, an online food delivery service patterned after Grubhub. GrubCanada was acquired by Just Eat in 2011 and Migdal spent most of the next decade as a top online food delivery executive north of the border, before moving to Chicago and joining Grubhub as CEO in March 2023.

Grubhub launched in March 2004 after signing up Charming Wok, its first Chicago restaurant, to market food delivery through the service. Like online dealmaker Groupon, Grubhub quickly became a centerpiece of the Chicago tech scene, and an influential platform for the burgeoning e-commerce industry.

In 2014, Grubhub filed for an initial public offering raising $193 million and valuing the company at north of $2 billion. Co-founder Evans left Grubhub that year to “pursue other opportunities.”

Just Eat gobbled up Grubhub for $7.3 billion in 2021. During its April 2024 quarterly financial update, Just Eat said it “continues to actively explore the partial or full sale of Grubhub.” It is unclear how the May deal enabling Amazon to increase its stake up to 18% over five years would impact the potential full sale of Grubhub going forward.