Groupon today announced it would join the online food delivery space, acquiring Baltimore-based OrderUp, which has O&O and affiliated delivery service in 40 markets. Most of the markets are college towns, which is a strongpoint for food delivery.
As Crain’s Chicago Business reports, OrderUp — Uber for your Burrito — raised $7 million in 2014 from investors that included former Living Social CEO Tim O’Shaughnessy, who had been an archrival of Groupon. The service was founded in 2009 and has a strong orientation towards buying existing food delivery services, rebranding them and then reselling them as franchises.
Groupon’s move extends its relationships with restaurants and other food providers. It is consistent with its efforts to migrate these advertisers from occasional deals into its “always on” marketplace, where it enjoys a well-rounded relationship based on the provision of offers, advertising, analytics, payments and Point of Sales.
It had been reported in April that Groupon was seeking to divest its Breadcrumb analytics, payments and Point of Sales business to a competitor such as Square. The acquisition of OrderUp could be less synergistic if Breadcrumb was actually divested.
With the OrderUp acquisition, Groupon will compete against other, more established food delivery companies, including Grubhub/Seamless, Yelp’s Eat24 and Delivery.com. Rather than focusing on winning market share against these players, it seems more likely that Groupon will initially seek incremental sales that support its broader initiatives.