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GrubHub.com Delivers The Goods!

by Howard Wolinksy

What's the hottest recipe for Internet success in Chicago? How about restaurant delivery?

There's big buzz among local Net business observers about GrubHub.com, a two-year-old startup that provides a restaurant delivery search engine/guide with side order of community reviews spiced with coupons.

Matt Maloney, 31, and Michael Evans, 30, GrubHub.com's co-founders, got the idea while working on the technology side at Tribune Co.'s Apartments.com, a search engine for apartments. They often ordered food for delivery but got tired of the same-old, same-old. They thought there ought to be an online service listing of restaurant that delivered. They were stunned to find none.

Maloney said, "We realized that we could provide a comprehensive database of restaurants that deliver -- searchable by address."

It was a struggle to get distrustful restaurant owners to understand GrubHub .com staffers weren't calling to order food but were offering them free advertising online.

David Weinstein, president of the Chicagoland Entrepreneurial Center, which has backed GrubHub.com, said, "This is one of the bright emerging companies in Chicago, and has gained some real traction, and has some good momentum out of the gate."

Maloney said what started as a hobby is now a business with more than $1 million in revenues. The site lists more than 2,000 restaurants in Chicago and "pushes" more than 1,000 food orders per night.

In 2006, GrubHub.com placed more than $4 million in Chicago delivery orders. "We have already placed over $3 million in orders in January through March of 2007," Maloney said.

GrubHub.com now serves Milwaukee, New York and San Francisco and is spreading to Boston, Seattle, and Washington, D.C.

Evans and Maloney built a site that provided free advertising to restaurants until orders are placed. "We don't make a dime until the restaurant makes a dollar," Maloney said.

Andy McGuire, owner of La Gondola, the Chicago-style pizza and Italian restaurant, said three-quarters of his business is based on take-outs and deliveries catering to young professionals in the Lake View/Lincoln Park area.

He said La Gondola's online strategy has paid off in the past six months, growing from 30 to 40 orders per month in the early period to 450 to 600 online orders a month now.

"GrubHub.com's unique offerings includes outsourced live phone-call ordering calls as well as online ordering, the exposure has exceeded my expectations to say the least," McGuire said.

He pays GrubHub.com 9 percent of the subtotal of each order processed through its online ordering system and a flat fee of $4.50 for every order processed on the phone. He pays a premium to be listed higher in the rotation of restaurants when users first sign onto GrubHub.com.

"Online ordering is definitely here to stay, grow and evolve. Over the last year, I have had so much success with online ordering Web sites that I no longer use Yellow Pages, direct mail, or pass out flyers," he said.