IPO-bound GrubHub Seamless' revenue jumped 67 pct in 2013
SAN FRANCISCO Feb 28 (Reuters) - GrubHub Seamless filed for an initial public offering on Friday as the largest online food delivery service seeks capital to extend its mobile and online network to more cities across the country and sustain growth.
The company, created by a merger of GrubHub and Seamless last August, processed some $1.3 billion of food orders in 2013 - still a fraction of the more than $60 billion that Americans spend on takeout from independent restaurants every year.
The company, which is backed by T Rowe Price among other private equity and fund investors, is aggressively expanding at the expense of profit.
Revenue jumped 67 percent to $137.1 million in 2013, while net profit slid to $6.75 million from $7.92 in 2012, and $15.21 million in 2011.
"Takeout enables them to grow their business without adding seating capacity or wait staff. Advertising for takeout, typically done through the distribution of menus to local households or advertisements in local publications, is often inefficient and requires upfront payment with no certainty of success," the company argued in its filing.
However, the company warned that it was in the midst of merging GrubHub and Seamless operations, which may affect business. Other risk factors mentioned in its prospectus included the risk of litigation - for instance from food-borne illnesses - and reliance on its restaurants for everything from service quality to timely delivery.
On Friday, GrubHub Seamless filed to raise $100 million in an IPO, a figure decided upon for the calculation of registration fees.
The company is the latest consumer dotcom name to tap public markets in 2014. Others expected to try and go public this year include cloud storage provider DropBox and its more enterprise-focused rival Box.
GrubHub Seamless cited Euromonitor figures showing that Americans spent $204 billion at some 350,000 independent restaurants in 2012. U.S. customers spent approximately $67 billion on takeout at these independent restaurants that year, the company said in its IPO filing.
It counted about 28,800 restaurants and 3.4 million active users in its network as of Dec. 31, and processed 135,000 orders daily, on average, in 2013.
The company's other backers include Benchmark Capital, Warburg Pincus and Goldman Sachs funds. Its IPO advisers are Citigroup, Morgan Stanley and Allen & Co.
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