Seamless knows what you want for lunch

July 13, 2012: 10:46 AM ET

Greek food if it's raining. Hamburgers over hot dogs almost any day. The innovative ordering company has reinvented tradition -- lunch -- via the web.

seamlessNEW YORK -- Seamless knows a lot about the way we eat. For example: Investment bankers order more sushi while hedge funders prefer deli options -- roast beef sandwiches and the like. On rainy days, people order more Greek food. And hamburgers have it over hotdogs anytime. Seamless customers ordered eight burgers for every dog last year. This kind of rich data has accumulated in troves over the past few years as Seamless has transformed itself from a meal service for corporate types working overtime to a restaurant delivery service linking more than 10,000 restaurants to hungry diners in more than 50 U.S. cities and London.

Seamless is just one of a host of new companies that have emerged in recent years to reinvent traditional industries by translating their services to the web. Looking for a dermatologist? ZocDoc lets patients find doctors and book appointments. Want to make a dinner reservation for your anniversary? OpenTable (OPEN) will help you find and book a romantic spot. And along with Chicago-based competitor GrubHub, Seamless is chasing the $25 billion takeout market -- a market that could expand to $75 billion if you count food pick-ups as well. It's free to users; the listing restaurants pay a percentage of each order to Seamless. CEO Jonathan Zabusky says the company brought in more than $400 million in revenues in 2011.

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This service marks a second coming for Seamless, which was originally called SeamlessWeb. The company got its start in 1999 when New York lawyer Jason Finger collaborated with a few friends to start a web-based takeout meal service for the legions of lawyers and investment bankers who routinely worked late. By 2006, when Philadelphia-based cafeteria operator Aramark bought the startup, it was the de facto meal provider for American corporate workers. But in the years that followed, Aramark was slow to invest in the business. Competitors like GrubHub began to cut into its business. Finger resigned. Then in 2011, under Zabusky's leadership, the company spun off from Aramark and took $50 million from private equity firm Spectrum Equity Investors. It rebranded, paid $15 million for Menupages, and stepped up advertising. (Witness the ads plastered in NYC subways: "Happiness is forgetting your lunch and instantly ordering something better.")

Today, the growth in the consumer business far outpaces the corporate business, particularly as more diners order from their mobile devices. On this year's busiest days, 35% of orders have been placed on a phone or the company's recently launched application for Apple's (AAPL) iPad. Zabusky predicts this mobility will expand the market as customers order on the go, having a pizza delivered to the park, say, or ordering a Chop't salad as you walk over to the restaurant so you can bypass the lengthy noontime line.

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Meanwhile Zabusky sees promising business potential among the thousands of restaurants -- often small mom-and-pop shops without sophisticated web skills -- that work with the company to put their menus on the web. These businesses can really benefit from all that data Seamless collects. Zabusky says that over time the Seamless platform could become core to how restaurants manage their businesses, helping them identify new customers, manage loyalty programs, and offer discounts and daily deals. "We think the suite of services is going to grow," says Zabusky. "If we can help merchants compete more effectively, that's going to create more consumer demand."

But to do this, Seamless will need to become ubiquitous. Although it dominates New York, where the company's flashy new office sports a touchscreen wall with a Google (GOOG) map mashup that lets employees zoom in on the weather patterns in any given market, Seamless has a smaller footprint in other big cities. Launched in 2004, competitor GrubHub also took $50 million in funding last year, and it acquired tiny startup Dotmenu. The company's web site boasts its presence in 300 cities. It's the kind of sharp competition that will force fast innovation. May the best service prevail.

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About This Author
Jessi Hempel
Jessi Hempel
Senior Writer, Fortune

Jessi Hempel is a New York-based technology writer for Fortune. She has written extensively about digital media, online advertising and social networking. Before joining Fortune in July 2007, Hempel worked at BusinessWeek and most recently served as their innovation department editor. Hempel is a graduate of Brown University and received a Masters in Journalism from The University of California at Berkeley.

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