Will Facebook’s food delivery service threaten GrubHub’s business model?

FAN Editor

Facebook (FB) rolled out its service allowing food ordering directly from its website on Friday, months after the company originally expressed interest in joining the fast-growing food delivery business.

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“We’re launching the ability to order food for pick-up and delivery, directly on Facebook. People already go to Facebook to browse restaurants and decide where to eat or where to order food, so we’re making that easier. We’re combining options from a number of restaurants and food ordering services, so you don’t have to search through multiple places and eat what you want, in just a few taps,” according to Alex Himel, Vice President, Local team at Facebook.

Commenting on the launch, Facebook told FOX Business, “We don’t charge fees and don’t take any portion of profits. All payment and tracking is done directly through our ordering partners.” The feature will incorporate several food ordering services including EatStreet and Delivery.com.

Pre-bell Friday when Facebook made the initial announcement, GrubHub’s (GRUB) shares fell about 3% but they rebounded in the regular session, and were fractionally lower Friday afternoon.

GrubHub charges restaurants a percentage of the orders placed through its service. GrubHub has come under fire for these fees because reportedly, restaurants can pay higher fees in exchange for being featured higher up in search results.

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FOX Business reached out to GrubHub for more clarity on the fees it charges restaurants, and its thoughts on Facebook’s entrance into food delivery. GrubHub noted that it has a “limited pilot” with Facebook, and that it is “already innovating on the ordering experience with integrations with Yelp, Groupon, Amazon Alexa, Apple TV, Apple Watch and TripAdvisor.”

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When it comes to fees, a spokesperson for GrubHub told FOX Business that the company’s goal is to bring the lowest cost of delivery to diners.

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