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Grubhub wins the food wars



  Deliveroo CEO: We're Changing the Way People Eat

Grubhub knows how to deliver food … and big profits.

The online shipping firm, which also includes Seamless, rose Wednesday on strong gains. Grubhub ( GRUB ) the stock rose more than 20% to a new record high.

Despite the competition from DoorDash, Uber Eats, and even the formidable Amazon [1

9455912] AMZN GrubHub thrills investors with its impressive growth. Sales increased more than 50% in the second quarter and earnings more than doubled.

Grubhub also works with larger national restaurant chains as well as local restaurants. The company announced a deal with KFC, Taco Bell and Pizza Hut owners Yum! Brands ( YUM ) earlier this year. Crap! bought a share in Grubhub.

Grubhub could add more chains soon after Wednesday's acquisition of the mobile carrier LevelUp.

LevelUp helps restaurants develop digital payment services and loyalty programs. Bareburger, Chop and Potbell ( PBPB ) are some of the more than 200 LevelUp customers.

Matthew Maloney, CEO of Grubhub, told analysts during a conference call on Wednesday that LevelUp's restaurant relationships were a major reason why GrubHub chose to buy LevelUp for $ 390 million.

Related: IHOP says it's still about pancakes, delivery contract with DoorDash

It's all part of Grubhub's strategy to get a bigger chunk of the delivery cake – especially among younger millennial consumers. That's why Grubhub accepted Venmo as a means of payment in the app earlier this year.

The company continues to add new markets to its delivery services. For example, Grubhub recently expanded to Santa Barbara, Reno, Scranton and Spokane.

These cities may not be as big as some of those where Grubhub already plays an important role, such as New York, Chicago, Los Angeles and San Francisco.

But Grubhub's chief financial officer Adam DeWitt told analysts during the conference call that entering smaller markets is an important part of the company's strategy – especially as the industry remains fragmented.

"The most important thing to remember is that, even if they are smaller, there is plenty of room for growth where we are today," DeWitt said.

CNNMoney (New York) First published on July 25, 2018: 11:56 pm ET


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