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Woocommerce Category Post Widget
Matt Maloney, founder and CEO of Grubhub.
Adam Jeffery | CNBC
The delivery wars have a new battleground: digital pickup.
Grubhub announced Thursday it is launching Ultimate, which uses software and hardware to allow restaurants to offer customers the ability to order their food online or through an app for pickup.
Founder and CEO Matt Maloney said the food delivery company is focusing on marketing the technology to small- and medium-sized restaurants.
“Diners have come to expect ordering ahead for pickup to breeze through busy rush hour crowds and grab their morning coffee or lunch, but currently they can only enjoy this convenience at large QSRs. Ultimate now gives restaurants of any size this ability to please diners with an easy, digital pickup experience,” said Maloney, in a press release.
Ultimate is being tested at three Chick-fil-A locations, Ohio State University and more than 100 restaurants in the New York City and Chicago areas, according to the company.
Industry-wide orders for pickup account for more than 50% of takeout sales and 58% of all digital orders, according to market researcher the NPD Group.
Pickup orders are growing faster than dine-in orders, with sales improving by 32% last year compared to 15.5% for digital delivery, NPD said. However, similar to delivery, the growth of the average order has fallen in recent years, declining 1.5% last year for pickup compared with flat growth for delivery.
According to Morgan Stanley, $350 billion is spent every year on food purchased from restaurants.
Grubhub had been the leader in the food delivery market, according to data from Second Measure, but it slipped to a 32% share of the market. That put it behind rival DoorDash, which had a 33% share, but ahead of Uber Eats, which had a 19% share, and Postmates with 10%. DoorDash saw sales grow by 143% year-over-year, catapulting it past Grubhub, which had controlled 43% of the market in 2018, according to Second Measure.
Providing a new tool for pickup orders could help it to grab more market share. Less than 10% of current Grubhub orders are pickup, the company said.
This new offering comes as restaurants are increasingly focusing on pickup orders. Domino’s Pizza, for example, has been well known for delivery but is inceasingly promoting its carryout business, which can be more profitable for it because it doesn’t require drivers to deliver the food.
Grubhub is slated to report earnings on Feb. 4. The company’s stock, which has a market value of $5.2 billion, is down 24% over the past year.
Ultimate has been under development for five years, the company said. It started as a queue on the app, allowing students at Ohio State to place a food order while in class and get details on when it would be ready.
That queue and order completion timer are part of a four-part system for restaurants that includes point-of-sale hardware that integrates to the Grubhub app, customer displays that show real-time order estimates, software for kitchen staff to receive orders and kiosks for customers to place orders in the restaurant.
“It’s a continuation of connecting the diners to the restaurant. But it is a completely different experience,” said Padma Rao, vice president special projects at Grubhub. “The customer can actually see where their order lives in context to the kitchen. It’s about owning the customer and all the different ways they want to interact with the restaurant.