GrubHub nabs more growth capital

Mike Evans and Matt Maloney of Chicago-based GrubHub
GrubHub co-founders Mike Evans and Matt Maloney have big plans for expansion

Watch for online restaurant delivery service GrubHub to  continue adding jobs, now that it has raised $11 million in a new round of venture capital from Benchmark Capital in Menlo Park, Calif.

The new funding, which brings to about $14 million the total investment capital GrubHub has raised, will allow the company to expand to new cities and continue to improve its technology.

Doubling in size

The company, which is on track to ring up about $70 million in restaurant delivery receipts this year, expects to hit $150 million in 2011 as it expands to new markets and adds mobile technology service. It currently has collected information from a base of about 13,000 restaurants in most of the nation’s major cities, including 4,500 that encourage online ordering.

GrubHub, which  charges restaurants a commission when users place orders on its site, plans to be in 26 markets a year from now due to the new infusion of capital.

“Our operation is growing so fast, we have to continually add heads to keep up with the execution,” said co-founder Mike Evans. Its head count has doubled in recent years to more than 70 employees and co-founder Matt Maloney said he expects it to exceed 100 workers by January.

Emphasis on service

While GrubHub has numerous competitors, the company says it offers more and better information and service than other companies. “It’s technology plus service and comprehensiveness,” Evans said.

Users key in their address to find restaurants that deliver to their location, then place orders online. Doing so eliminates costly mistakes that often are human error, helping to ensure customers get the food they asked for.

GrubHub keeps its menus reliable by getting the information from restaurants instead of waiting for the restaurants to send in new data, Evans said. “It’s an investment to get the menus and keep them updated,” he said.

The company also provides additional customer service by hiring its own staff to trouble-shoot. “Restaurants are slammed during the dinner hour, so we staff people to make sure we take care of customers,” said co-founder Matt Maloney. “We relieve that burden from the restaurants.”

A better way

Maloney and Evans got the idea for GrubHub six years ago while working at another dot-com where they ordered the same pizza so often that they grew tired of it. “We thought there must be a better way,” Evans said.

So they started GrubHub in 2004 in Evans’ apartment. The target customer is “anyone who doesn’t have time to cook for themselves or doesn’t have the desire to,” Maloney said.

That turns out to be a massive market, and the business has proved to be largely recession-resistant. “Even in a tough economy, we’ve been able to help our restaurants thrive,” Evans said. “They’re doing so much better as a result of being on GrubHub.”