Matt Maloney, GrubHub co-founder and CEO, speaks before Mayor Rahm Emanuel announced that more than 20 Chicago-based technology companies have committed to create more than 2,000 jobs, collectively in Chicago during news conference at Grub Hub, 111 W. Washington St., Monday, September 24, 2012. l John H. White~Sun-Times Media
Updated: December 19, 2012 12:20PM
Experts say if food-delivery and takeout company GrubHub becomes Chicago’s second hot tech company to go public, it will have to carefully gauge the timing.
A Reuters newswire story last week quoted three unnamed sources as saying GrubHub has hired banks for an initial public offering next year and has chosen Citigroup to lead the IPO. GrubHub did not confirm the report, calling it rumors.
“Every company has bankers and lawyers for all kinds of things,” said GrubHub CEO Matt Maloney, who co-founded the company with Chief Operating Officer Mike Evans. “As for what we’re hiring these folks for, that’s all speculation.”
Maloney said Wednesday that GrubHub is the leader in its category and “has created an incredible value proposition for restaurants and diners” — and as a result, has many options in such a huge market.
Maloney said he wouldn’t be so bold as to predict that GrubHub could soon rise to the top of Chicago’s entrepreneurial and business innovators pile, but he credited Groupon for paving the way for local entrepreneurs to grow, gain attention and attract more outside investment than ever before.
A Saibus Research analyst who asked not to be named because he works with similar IPO placements said Wednesday of GrubHub, “They are the ‘Big Daddy’ company of their space in online delivery, so they would do OK in an IPO, depending on the timing and the underwriters.”
Given Groupon, Facebook and Zynga’s troubles in a stock market impatient for quick revenue growth, GrubHub would do well to show potential investors that there is plenty of growth ahead in the marketplace, the analyst said.
“GrubHub isn’t a novel idea, but they’ve done it right,” the analyst said. “The bottom line is how much upside is out there? That’s tough to gauge.”
The analyst said the IPO should be timed carefully, ideally after fiscal cliff negotiations are completed, so that the market is more stable.
Maloney said GrubHub, newly relocated to the top three floors of the classic Chicago-style Burnham Center skyscraper at 111 W. Washington, intends to keep growing and introducing innovative technology.
The company’s 60,000 square feet of space downtown is three times the square footage of its former Bucktown location, and GrubHub has pledged to double its 250-employee workforce by 2015.
The company has raised $84 million in venture capital during its eight-year existence by proving its success helping people find local eateries and order restaurant deliveries and takeout/pickup service online.
The service grew in popularity during the recession. It also acquired New York-based Dotmenu, which ran Campusfood and Allmenus.
On Tuesday, GrubHub launched a new service that lets users receive text alerts when their food is on its way or open GrubHub’s free mobile app to track the delivery on a map in real time.
“We’re bringing world-class, cutting-edge technology to take-out,” Maloney said. “We’re making it really fast and really easy and fun in an industry lacking those attributes, so more people are going to continue to order on our platform,”
GrubHub’s network covers more than 17,000 restaurants in 400 cities nationwide. Though the company is privately held and its revenues are undisclosed, company executives have told the Sun-Times that GrubHub provided $85 million in sales in 2010 to its restaurant clients and expected the total to more than double, to $200 million, in 2011.