Deals website Groupon acquired Baltimore food delivery startup OrderUp for an undisclosed amount, the companies announced Thursday.
Groupon officials said they were seeking access to OrderUp’s customers, who have made more than 10 million orders since the company was founded in 2009, and its relationships with thousands of restaurants. OrderUp’s smartphone app and network of drivers let customers get food brought to their doorsteps from nearby restaurants that often otherwise do not offer delivery.
“Online food ordering and delivery represents an untapped opportunity for Groupon and serves as a natural extension of our local marketplace,” said Groupon CEO Eric Lefkofsky.
Chicago-based Groupon is best known for its emails offering daily deals at local businesses.
Lefkosky and OrderUp CEO Chris Jeffery said the growth of mobile and access to Groupon’s customers and clients presents an opportunity to expand OrderUp, which delivers food in about 40 markets across the country.
“Groupon’s reach and ability to connect supply and demand at scale make it the perfect destination for us to grow even faster and expand in our targeted local markets,” Jeffery said. “We look forward to bringing the thousands of great restaurants that we feature to hungry Groupon customers across the country.”
OrderUp will maintain its Baltimore headquarters, a 15,000-square-foot space at the Can Company in Canton, and continue to operate as a stand-alone brand, the companies said. The company, which employs 80 people in Baltimore and 50 more across the country, raised $10 million in investment last year, including $7 million from Revolution Ventures in Washington, D.C.
Jeffery and Jason Kwicien, now OrderUp’s vice president of delivery options, founded the company in 2009 as a twist on a website they built in 2003 as students at Pennsylvania State University. It started as a website letting users read restaurant menus online, later adding the ability to order via the Internet, and, eventually, have their orders delivered.
Like the app-based car service Uber, OrderUp uses a network of drivers who are considered contractors and can accept or reject chances to make deliveries.
Tige Savage, a managing partner at Revolution, wrote in a blog post that the Groupon acquisition comes amid intense interest in food delivery startups. Investment in food ordering businesses totaled $600 million in 2014 and had reached $360 million this year as of May, according to the blog TechCrunch.
While food delivery services traditionally were limited to major cities, OrderUp and competitors such as GrubHub, Seamless, Eat24 and Delivery.com have expanded to suburbs and college towns.
Groupon’s reach, with 25 million clients across North America, should help OrderUp grow, Savage wrote: “Combined with OrderUp’s best in class online food ordering and delivery platform, the combination of the two is well positioned to become the national online food delivery leader faster than OrderUp could have on its own.”
Shares of Groupon, which are traded on the Nasdaq, closed up 3 percent Thursday at $5.17.
Deb Tillett, president of Baltimore’s Emerging Technology Center business incubator, said she was pleased to hear about the deal, both as an OrderUp customer and a local business advocate. Groupon’s reach could be an asset, and it could translate into a boost for other local businesses if Jeffery and Kwicien use their windfall from the deal to invest in other local startups.
“It’s a great opportunity for their growth,” Tillett said. “With the power and name recognition — and, I would think, probably capital — behind Groupon, that’ll just make their growth explosive.”
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