NEW YORK - Wall Street has a major craving for takeout.
Investors sent shares of GrubHub Inc. up more than 30 percent Friday in an initial public offering that gave the online food-ordering service a market capitalization of nearly $2.7 billion.
Whether GrubHub can hold onto its gains remains to be seen. The company is attractive to investors because of its potential to grow in a new field, said Kathleen Smith, a Renaissance Capital principal.
GrubHub is trying to change the way people order takeout from restaurants. Instead of calling in an order, people can order meals online or through a few taps on a smartphone app and can search through many restaurants at once by cuisine or other specifications. The Chicago-based firm makes money by taking a percentage of each order. The company doesn't say how much it charges, but restaurant owners have said it's about 15 percent. The more that a restaurant pays, the higher it appears in GrubHub's listings.
CEO Matt Maloney said most people in the country are still ordering food with a paper menu and a telephone call.
"It's ridiculous," he said. "That's where the growth is."
GrubHub launched national TV campaigns last year to convert people to online ordering. The company also owns Seamless, another online takeout company. GrubHub and Seamless merged in August, but both still operate separately. While more people use GrubHub, Seamless is popular along the East Coast.
"It's like a religion in New York," Maloney said.
GrubHub also owns Allmenus.com and MenuPages, which post menus from restaurants across the country. The company has 3.4 million active users and had revenue of $137.1 million in 2013, up 67 percent from the year before.
The company does have competition. Rivals Eat24 and Delivery.com compete in some of the same major cities as GrubHub. Even online review site Yelp allows users to order takeout from its site, thanks to partnerships with Eat24 and Delivery.com.
GrubHub, whose stock is trading on the New York Stock Exchange under the ticker symbol "GRUB," raised $192.5 million Friday after pricing more than 7.4 million shares at $26 each. That was better than the company's previously expected range.
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$26 Per-share price set for GrubHub for its initial public offering Friday
$192.5M Amount GrubHub raised in the IPO, selling 7.4 million shares
$34 Closing price Friday for GrubHub on the New York Stock Exchange, representing a first-day stock price gain of 30.77 percent