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GrubHub, Seamless complete combination

Published August 9, 2013 9:13 am

This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

NEW YORK • Rivals Seamless and GrubHub said Friday that they have completed their combination, creating an online takeout company covering about 25,000 restaurants in 500 cities.

The new company will operate under the name GrubHub Seamless, but both brands and their respective websites will continue to operate separately, company spokeswoman Allie Mack said.

Financial terms were not disclosed. The deal had been announced in May.

GrubHub CEO Matt Maloney becomes CEO of the combined company, while Seamless CEO Jonathan Zabusky will serve as president. Both New York-based Seamless and Chicago-based GrubHub will have significant representation on the new company's executive team and board.

"We are excited to take our collective experience and move forward together to set a new industry standard for restaurants, diners and corporate clients," Maloney, who co-founded GrubHub in 2004, said in a statement.

Online takeout ordering services work by contracting with restaurants, mostly in large metropolitan areas, to list themselves on the websites. Diners can search the menus, along with reviews posted by diners, on their computer or smartphone to find the food they want and then order and pay online.

The services appeal to diners by eliminating the need for a kitchen drawer of takeout menus, while also helping them discover new pickup and delivery options in their neighborhoods. Meanwhile, restaurants can benefit from new business and don't have to deal with as many phone orders, which can be labor intensive and prone to error.

Restaurants also don't have to commit to offering online ordering through just one service. As a result many already offer online ordering through both GrubHub and Seamless, along with other competitors such as Delivery.com and Eat24.com.

But that hasn't stopped the intense competition within the industry. In recent years, all of the major companies have stepped up their marketing efforts, boosting their sales staffs and promoting themselves through everything from print ads in subway systems to online contests and dining discounts distributed through social media like Twitter and Facebook.

While online ordering still accounts for just a tiny fraction of the overall takeout industry, GrubHub and Seamless processed about 130,000 orders a day combined in the first half of this year. Last year, orders through the pair totaled about $875 million in gross food sales, resulting in combined revenue of more than $100 million.

Seamless North America LLC, which got its start focusing on corporate orders, was spun off from Aramark Corp. last fall. Before that, Spectrum Equity Investors bought a minority stake in the company for $50 million. Seamless covers about 12,000 restaurants in 40 cities, mostly on the East and West Coasts, along with Houston and Austin, Texas, and overseas in London.

GrubHub, a startup that made its name catering to college students and through its quirky social media activities, now covers 20,000 restaurants in about 500 cities. It also owns Allmenus.com.

Mack said that for the time being, restaurants will still need to sign up separately to be represented by each of the brands and diners will need to maintain separate GrubHub and Seamless accounts.

The combined company plans to focus on maximizing growth, rather than cutting costs. As a result, all of its current offices will remain open and no job cuts are planned, Mack said.

Both GrubHub and Seamless are privately held and the combined company is expected to remain that way for the near term. Analysts have speculated that an initial public offering of stock could eventually follow.