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Why GrubHub Is Buying Tapingo

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Platform available in over 150 colleges

GrubHub (GRUB) has struck a deal to acquire campus food-ordering platform Tapingo. It has committed to pay ~$150 million for the purchase in a transaction that’s expected to close before the year’s end. Tapingo marks GrubHub’s fifth acquisition deal since the start of 2017.

Tapingo’s platform is used by food outlets on more than 150 college campuses, and it reaches more than half a million student diners. Students use Tapingo to place food orders in advance, and food outlets such as on-campus cafes and restaurants use the platform to accept advance orders, thereby saving time for both vendors and diners.

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Expanding in the college student market

GrubHub is banking on Tapingo to increase its exposure to the college student market and increase its brand awareness.

Since Tapingo’s platform has support for POS (point-of-sale) systems, this acquisition could help GrubHub close the gap with its rivals in areas where it may have earlier faced some limitations. In May, Square (SQ) introduced a restaurant-specific platform that comes fully integrated with POS and is linked to its Caviar food delivery service.

$15.5 billion revenue opportunity

The US meal delivery market is expected to generate $15.5 billion in revenue by 2022, up from $8.5 billion last year, according to Pentallect.

The deal to acquire Tapingo adds to a series of moves GrubHub has been making lately to try to strengthen its competitive position. Last year, the company bought Yelp’s (YELP) food delivery business, Eat24.

GrubHub’s revenue increased 51% YoY (year-over-year) to $239.7 million in the second quarter. Groupon (GRPN) and Blue Apron (APRN) reported revenue falls of 6.8% and 24.6% YoY, respectively, in the period. GrubHub’s revenue is expected to have risen 46.3% YoY to $238.6 million in the third quarter. The company is set to report its third-quarter earnings results on October 24.

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