Grubhub Buys LevelUp for $390 Million

Grubhub announced this morning that the company is acquiring restaurant tech startup LevelUp for $390 million in cash.

In the deal, LevelUp will get access to Grubhub’s giant consumer base and be able to add delivery integration into its own product offerings, and Grubhub will use LevelUp’s strengths in diner engagement to drive orders on its own delivery platform and with its restaurant partners.

“We started talking to LevelUp earlier this year in the context of a partnership because of their deal with restaurant relationships and their ability to integrate to the POS,” Grubhub CEO Matt Maloney explained on the company’s most recent earnings call. “And then as we continued to work through whatever partnership would look like, it became very obvious that the strategically, we were both aligned and it made the most sense to actually go ahead and acquire them.”

So, here we are. LevelUp gets to keep its Boston headquarters, Seth Priebatsch (LevelUp’s CEO or, as he refers to himself, “chief ninja’) will report to Maloney, and Grubhub gets to lay claim to LevelUp’s relationships with over 200 restaurant chains and proclaim the Boston offices as their newest center of technology excellence, as Maloney put it on the call.

“For the last seven years, the LevelUp team has worked to provide our restaurant partners with a complete solution to engage customers in this rapidly evolving digital landscape,” Priebatsch said in a statement on the news. “By becoming a part of Grubhub, we take our biggest and most exciting step in achieving that mission.”

In a letter to LevelUp’s restaurant partners, Priebatsch detailed a bit of what would change with the deal. All of the services that LevelUp offers, including loyalty programs and data analytics on customers, will continue as usual. But now, LevelUp will included integrated Grubhub delivery as an option in its own product offerings.

LevelUp is best known for its loyalty offerings, but Grubhub plans to capitalize on the entire swath of LevelUp’s white-label business. Maloney noted on the call that Grubhub powers Yum Brands’ white-label ordering system, and now will be able to do that job much better with LevelUp’s products involved.

“It will take time for us to realize the full benefits of the acquisition,” Maloney said. “But in the shorter term, we are very excited to leverage the extensive and seamless POS integrations that LevelUp has built. Over the medium and longer term, LevelUp’s technology and world-class team will help Grubhub dramatically expand our product offering for restaurants helping them compete most effectively in the online world for delivery and pickup business.”

Grubhub shares are up over 25 percent in the wake of the announcement and the release of the company’s second quarter earnings.