Grubhub (NYSE:GRUB) is launching a new subscription-based membership loyalty program called Grubhub+ that aims to be the Amazon Prime of food delivery.
For $9.99 per month, subscribers get unlimited free food delivery plus numerous perks, including 10% cash back on all orders made at Grubhub-affiliated restaurants, matching donations to charitable organizations, access to "Elite Care" support teams, and early access to promotions Grubhub is running.
Assigning a price to loyalty
Grubhub has encountered declining market share since it switched from being essentially a restaurant menu aggregator to a food delivery service, with CEO Matt Maloney blaming consumers for being "promiscuous" and not having any loyalty to a particular app for its problems.
Rising competition from rivals like DoorDash and Uber Eats has created a promotional environment where discounting is eating away at profitability. While Maloney stressed Grubhub was "the only profitable company in our space," the service seemingly continues to advance the promotional nature of the business.
It would seem the food delivery company will also have a problem of buying loyalty from customers who are arguably more interested in the food that's being delivered rather than who's delivering it.
By Grubhub's own statements, customers are using multiple apps to get their favorite food, but Grubhub+ would have consumers paying $10 per month for an app they may not use since it's the food and not the delivery company that is essential.
Users, though, would be able to pay for the cost of the subscription if they ordered $100 worth of food every month through Grubhub-affiliated restaurants. Users get a 14-day free trial and students enrolled at any of more than 150 colleges that work with Grubhub can use it for free.