Two Chicago Tech Giants Battle it Out for Dominance in Food Delivery

July 30, 2015

4:00 pm

The Chicago, IL-based, local commerce powerhouse Groupon announced today the official launch of its food delivery and takeout service Groupon To Go. Launched in beta this past March, the new platform will offer options from more than 500 restaurants across Chicagoland. With its official launch, Groupon To Go is marked to take on food delivery giant (and fellow Chicago-based tech company) GrubHub.

“Most people get delivery and takeout multiple times a month, and with Groupon To Go, we’re giving them an easy way to save money every time they do so,” said Sean Smyth, Groupon To Go vice president and general manager, in a statement. “Delivery and takeout is a natural extension of our local deals marketplace, adding hundreds of the best restaurants to Groupon––including many that haven’t offered online ordering until now.”

The launch of Groupon To Go follows the company’s recent acquisition of the Baltimore, MD-based food delivery startup OrderUp. Unlike current competition in the food delivery space, OrderUp focused on more than 40 mid-sized markets, like college towns, which has allowed the company to process more than 10 million orders since its founding in 2009. According to Groupon, the OrderUp name will continue to be used in these markets, but will launch as Groupon To Go in larger markets (including Boston, MA and Austin, TX – the two additional cities in which it plans to launch this upcoming fall).

More significant, though, is what this move into food delivery means for Groupon and its competition with GrubHub and the overall food delivery space. Each considered one of Chicago’s greatest startups – renowned for their development into nationally-recognized brands and for their early roles roles in accelerating Chicago’s tech ecosystem – GrubHub and Groupon have never competed directly in the same space.

Groupon, with its roots in daily deals with local merchants, has struggled in recent years to find a sustainable, revenue-generating model. GrubHub, on the other hand, has done extremely well; in 2013, it acquired popular food delivery service Seamless, making its food delivery services available in more than 900 U.S. cities (and London) from approximately 35,000 restaurants. And, Groupon seems to be deeply cognizant of this fact, offering a 10 percent savings in instant cash back with each order on its new Groupon To Go platform, as well as including major national restaurant chains (such as Popeyes and Subway) in its service – a differentiator that’s been successfully implemented only on Postmates.

For Groupon, a transition into the on-demand delivery space is a smart, strategic move. There’s high demand from consumers who are always looking for more choices when it comes to food delivery. While Seamless and GrubHub dominate the market, the industry is gradually getting more competition. Postmates, for instance, picked up a not-too-shabby $80 million in a Series C just past June. In April, Uber launched UberEATS. By leveraging its already-existing connections with local vendors in all its market, Groupon has the potential to outperform GrubHub and Seamless with Groupon To Go.

To celebrate the launch of Groupon To Go, Groupon is offering a chance to win a Groupon To Go office party with tailgate games and food delivered by former Chicago Bears coach Mike Ditka.

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Ronald Barba was the previous managing editor of Tech.Co. His primary story interests include industry trends, consumer-facing apps/products, the startup lifestyle, business ethics, diversity in tech, and what-is-this-bullsh*t things. Aside from writing about startups and entrepreneurship, Ronald is interested in 'Doctor Who', Murakami, 'The Mindy Project', and fried chicken. He is currently based in New York because he mistakenly studied philosophy in college and is now a "writer". Tweet @RonaldPBarba.