Rapid and controlled advances in technology have helped every single industry grow. The food industry is no exception. Caviar and Grubhub are 2 top food delivery service providers in the food industry. Additionally, Caviar vs. Grubhub is the talk of the town, especially if business models are the fields of study.
How is Grubhub’s business model any different from the Caviar one? Both business models are quite similar. However, a few key differences help people distinguish them and learn about their characteristics. Let’s figure out the necessary information about Caviar vs. Grubhub business models and how they work.
What is Caviar?
Founded in 2014 in New York by Jason Wang, Caviar is among the leading food delivery companies. As the name suggests, Caviar strives to provide its customers with premium dining experiences. The biggest difference between the Caviar and Grubhub business models is that Caviar chisels out its market opportunities.
After that, it participates in healthy competition with other food delivery companies in the industry. On the other hand, Caviar is very demanding when selecting restaurants and couriers. Hence, as a customer, you can expect only top-notch dining experiences and nothing else when you rely on Caviar for ordering food.
In addition, Caviar pays attention to an area comparatively smaller than other delivery companies aim for. If you are associated with Cavia food delivery service, then it’s an advantage, for sure. As a food delivery associate, you can serve only 11 major metropolitan areas from Caviar.
Conversely, Caviar charges a 25% fee, which is quite average in the industry. However, Caviar drivers typically can earn more compared to other food delivery companies. For example, a Caviar driver can earn up to $79,00 annually. This is $8,000 more than DoorDash drivers and $9,000 more than Grubhub drivers.
Caviar Business Model
Not to mention, Caviar is a fancy food delivery start-up. Due to its superior app interface and services, Caviar has gained a colossal mass of customers even though it can access very few restaurants. Additionally, Caviar’s business models concentrate on exclusiveness and multi-homing to generate potential network effects with its existing users.
The Caviar business model has two sides. On one side, it helps customers understand their favourite cuisine. On the other hand, Caviar directly partners with restaurants. As a matter of fact, Caviar works with more than 400 food partners, including established restaurants, catering companies, and food trucks.
Evidently, Caviar focuses more on quality rather than quantity. That’s why it collaborates with restaurants that have a minimum rating of 4 on Yelp. Once a restaurant comes on board, the company sends employees and photographers to the restaurant for menu sampling.
After that, Caviar employees test the dish taste and select only those that have cleared the test. Thus, Caviar succeeds in picking up only the finest dishes and makes them available to customers for doorstep delivery. How does Caviar deliver these food items to customers by the way?
It takes you to the delivery operations of the Caviar business model. Caviar acquires its own independent ‘food messengers’ or contractors to deliver to customers. So, the company doesn’t depend on restaurants’ delivery service to serve customers. As a customer, you can download the Caviar mobile app or navigate to its website to order food.
What about Caviar’s Revenue Model?
Caviar earns profit from a markup (which is approximately 20%) on the price of food items, delivery fees, and other related services. Previously, Cavia offered a flat courier fee no matter how big the order was. This triggered many start-ups to place orders in large volumes. Consequently, it benefitted Caviar, too, with bulk orders and huge cash flows from them.
However, Caviar has now switched to a variable charging system. The charge can be in between $1.99 and $6.99. On the other hand, the courier fee depends on the distance travelled by food messengers. In addition, Caviar issues a flat 18% service charge on the overall bill.
Like any other business, Caviar concentrates on generating more revenue with limited costs. Therefore, they maintain an equilibrium in ordering, marketing, and delivery networks. Already, Caviar has impressed customers with its user-friendly app experience and premium services.
Restaurants can also receive real-time orders through Caviar apps. On the other hand, Caviar’s food messengers reach restaurants according to their schedules. Once the food is cooked, delivery contractors deliver the food.
What is Grubhub?
Before we jump into the Caviar vs. Grubhub conflict, it’s important to learn about Grubhub’s business models, too. So, Grubhub is an on-demand online food delivery service that works similarly to Caviar. Grubhub takes customers’ orders and asks its food messengers to deliver the order from the selected restaurant.
Next, Grubhub gets customers’ orders delivered to their doorsteps. However, Mike Evans and Matt Maloney founded Grubhub in 2004. Headquartered in Chicago, Illinois, Grubhub operates in more than 4,000 U.S. cities.
On the other hand, Grubhub consists of different brands such as MenuPages, LecelUp, Seamless, AllMenu, etc. The company lets users browse many restaurants for preferred food requirements. Grubhub is not that much selective about restaurants like Caviar, by the way. However, users can use the dedicated app to choose restaurants and food items and place orders.
After users pay for the order, the respective restaurant prepares the food item and packs it for delivery. Next, Grubhub delivers the food to the customer using their delivery persons.
Grubhub Business Model
Are you looking for the differences between Caviar and Grubhub business models? Let’s find out how the Grubhub business model works then. Just like Caviar, Grubhub has 2 sides to maintain and they are Customers and Restaurants.
Here’s how Grubhub has worked on the value proposition for customers and earned a huge base so far:
- Grubhub connects diners to local restaurants via a user-friendly and customised platform.
- In addition, the company promises to deliver food to customers’ doorsteps.
- Grubhub provides direct access to available food items without paper menus.
- The company allows customers to track the incoming food and its status.
- Moreover, Grubhub makes reordering extremely convenient by saving customers’ past orders, preferences, and payment details.
Thus, customers can order food from the comfort of their homes. Grubhub has also designed compact applications for customers to order food, pay for them, track the delivery, and take more actions.
What about Restaurants?
Similarly, Grubhub’s value proposition for local restaurants offers the following advantages to its partner restaurants:
- The food delivery platform offers delivery workers to the restaurants.
- Furthermore, restaurants can experience an increase in takeout without expanding their seats and staff.
- Grubhub offers software to restaurants for order and delivery management facilities.
- Apart from that, restaurants can get risk-free publicity along with an extended customer base.
On top of that, Grubhub charges no upfront or subscription fees from restaurants. Restaurants have to pay for the portal only when they use the platform to generate diners. Therefore, the Grubhub business model offers high-return, low-risk, and entirely trackable features for restaurants.
Revenue Model of Grubhub
What are the sources of revenue in Grubhub’s business model? Well, Grubhub receives its revenue from the following 3 sources:
- Grubhub imposes a delivery fee on customers for food delivery and associated services. Overall, you can expect a delivery fee anywhere between 20% and 40% while ordering from Grubhub.
- Additionally, Grubhub charges customers for displaying restaurants and their menus for a limited period.
- However, the primary source of revenue for Grubhub is the commission fee. Grubhub charges its partner restaurants anywhere from 5 to 15%.
Differences Between Caviar and Grubhub Business Models
Needless to say, Caviar and Grubhub are competitors in the food delivery industry. Both platforms execute almost the same operations and business models. However, you can spot a few slight differences between them. Here are the major differences between Caviar and Grubhub business models:
Delivery Methods
Both Caviar and Grubhub allow customers to navigate through different dishes and restaurants and order conveniently in their local area. However, Caviar has its own delivery person system to manage delivery.
Whereas Grubhub allows restaurants to manage their food delivery using restaurants’ delivery systems sometimes. So, Caviar is a great option for restaurants that don’t want to tackle delivery tantrums. On the other hand, Grubhub is the best for restaurants that want to take care of their customers themselves.
Variety in Foods and Restaurants
Grubhub has partnered with over 80,000 restaurants to date. On the other hand, Caviar prefers a local area and its restaurants to work with. In fact, Caviar partners with only those restaurants that have earned a minimum 4-star rating.
Thus, you can accept more variety in food and restaurants if you opt for Grubhub. Whereas you will get a few options around you in case you choose Caviar. However, restaurants in partnership with Caviar will never disappoint you with food, cutlery, and additional services.
In recent years, Caviar is trying to become a more sophisticated version of Grubhub and other food delivery systems. Thus, Caviar can accept more restaurants virtually. However, Caviar doesn’t agree to compromise quality over quantity just because of securing a large customer base such as Grubhub.
Alternatives to Caviar and Grubhub
Conflicts between Caviar vs. Grubhub are quite evident as both target the same customer niche using their own trusted business models. However, as a consumer, you can settle for any of them as per your preferences.
Otherwise, you can rely on any of the following food delivery partners in the USA:
- DoorDash
- UberEats
- Postmates
- Zomato
- ChowNow
- Slice
- Swiggy
Bottom Line
Both Caviar and Grubhub offer frictionless and convenient food delivery services to customers. However, their business models are not one of their kind. Most food delivery platforms devise almost identical business models to serve customers and pair with restaurants.
However, Caviar strives for quality over quantity and that makes it unique in the Caviar vs. Grubhub debate. On a contrary note, Grubhub delivers more versatility for customers. In addition, it enables restaurants to take care of deliveries personally.
