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Grubhub Launches ‘Ultimate’ for Digital Pickup Orders to Compete in Delivery Wars

An open restaurant. (Representation)

The delivery wars have a new front: digital pickup. On Thursday, Grubhub announced the launch of ‘Ultimate,’ a technology suite designed to enable small- and medium-sized restaurants to offer online and app-based pickup orders.

Founder and CEO Matt Maloney emphasized that while large quick-service restaurants (QSRs) have popularized ordering ahead for pickup, smaller establishments have lagged behind. “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,” Maloney said in a press release.

Grubhub is currently testing ‘Ultimate’ at three Chick-fil-A locations, Ohio State University, and over 100 restaurants in New York City and Chicago. This initiative comes in response to a significant market trend: pickup orders account for more than 50% of takeout sales and 58% of all digital orders, as reported by market researcher NPD Group.

NPD Group also noted that pickup orders grew by 32% last year, outpacing the 15.5% growth in digital delivery. Despite this growth, the average order size for pickups declined by 1.5%, contrasting with the flat growth for delivery orders.

With $350 billion spent annually on restaurant food, according to Morgan Stanley, Grubhub aims to capture a more significant share of this market. Grubhub’s market share slipped to 32%, putting it behind DoorDash’s 33% but ahead of Uber Eats at 19% and Postmates at 10%. DoorDash’s rapid 143% year-over-year sales growth has challenged Grubhub’s previous dominance.

Currently, less than 10% of Grubhub’s orders are for pickup. By enhancing its digital pickup capabilities, Grubhub hopes to reclaim market share and attract more diners. This strategy aligns with trends in the industry, as exemplified by Domino’s Pizza, which is increasingly promoting its carryout business.

Set to report earnings on February 4, Grubhub, with a market value of $5.2 billion, has seen its stock decline by 24% over the past year.

‘Ultimate’ has been in development for five years, originating as a queue system allowing Ohio State University students to place orders during class and receive real-time updates. The system now includes four components: point-of-sale hardware integrated with the Grubhub app, customer displays showing order estimates, kitchen software for receiving orders, and in-restaurant kiosks for order placement.

Padma Rao, Grubhub’s vice president of special projects, described ‘Ultimate’ as a continuation of connecting diners to restaurants, offering a unique experience where customers can see their order’s progress. “It’s about owning the customer and all the different ways they want to interact with the restaurant,” Rao said.

By addressing the growing demand for digital pickup options, Grubhub aims to enhance customer convenience and strengthen its position in the competitive food delivery market.

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