Food delivery service OrderUp, LLC is looking at laying off as many as 70 employees and will relocate its Baltimore headquarters as a result of a deal its parent company struck with a competitor.
GrubHub Inc (NYSE:GRUB), a food delivery service, announced it has partnered with Groupon Inc (NASDAQ:GRPN). The move will bring food delivery to Groupon customers throughout the United States. Terms of the deal, which is expected to close later this year, were not disclosed.
As part of the agreement, Groupon members will be able to order food delivery from GrubHub’s 55,000 restaurant partners via the Groupon platform. At this time, Groupon currently offers food delivery through OrderUp in about 40 markets.
This new acquisition will take that number significantly higher. GrubHub offers food delivery in around 1,100 cities. By partnering with Groupon, GrubHub will be able to absorb the OrderUp markets it isn’t already in.
The recently announced deal will see GrubHub acquire 27 of OrderUp’s company-owned food delivery markets.
No doubt, this announcement was a surprise to Baltimore-based OrderUp, an online mobile food-ordering and delivery company that is part of the Groupon family. Groupon acquired OrderUp in July 2015 for $69.0 million.
About 80 employees were working out of OrderUp’s Baltimore headquarters when it was acquired by Groupon in 2015. While Groupon would not say how many people are still working out of that location, it did reveal that the deal with GrubHub would result in the layoff of 60 full-time employees and 10 part-time staff. Some of the staff work remotely, but are affiliated with the Baltimore office.
OrderUp’s headquarters will remain in Baltimore, but will move to a smaller location.
OrderUp’s drivers are independent contractors and will most likely need to sign new contracts with GrubHub in order to stay on.
A spokesperson with GrubHub declined to say which of the 27 OrderUp markets GrubHub would be taking over. That said, the “OrderUp” brand will be phased out in those markets. As part of the deal, OrderUp will retain the OrderUp brand, as well as its proprietary technology and intellectual property.
OrderUp will retain a presence in 11 markets, including Columbus, Ohio; Eugene, Oregon; Bloomington, Indiana; Northern Colorado; and San Diego, California.
“Groupon and GrubHub Announce Strategic Partnership to Bring Food Delivery to Groupon Customers Throughout the United States,” GrubHub Inc, July 31, 2017.
“Baltimore’s OrderUp headquarters facing 70 layoffs after Groupon deal with GrubHub,” Baltimore Sun, August 1, 2017.