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GrubHub to gobble up Boston startup LevelUp

Using the LevelUp system, users can pay for food with their smartphones.
Using the LevelUp system, users can pay for food with their smartphones. (LevelUp)

The online food-ordering company Grubhub announced Wednesday that it has agreed to buy the Boston startup LevelUp, which makes technology to support restaurant payment and loyalty programs.

Already a dominant player in the delivery business, Grubhub hopes the deal will allow it to deepen its relationships with the restaurants it serves. The acquisition would give the company a significant foothold in the technology that restaurants use to process sales and manage loyalty programs.

“Together, we will provide restaurants with everything they need to grow profitably as more and more diners opt for the convenience, transparency and control of ordering online,” LevelUp chief executive Seth Priebatsch said in a statement.

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LevelUp had raised more than $100 million from venture capitalists. Originally called SCVNGR, it began as a program to make a game out of dining, encouraging zany patron behavior as part of scavenger hunts while visiting participating establishments.

The company eventually settled on a less-flashy business model, however, offering programs that allow users to pay for food and earn loyalty rewards using mobile devices.

The company had in recent years been working to integrate its payment options into online and mobile ordering programs, often working behind the scenes on “white label” products that bore its customers’ branding.

Chicago-based Grubhub has been growing into a dominant player in the online ordering and delivery market. Last year, it bought — then closed — Foodler, another Boston company and one of several major competitors it has gobbled up.

Grubhub has scooped up several other companies as it seeks to build out a more complex suite of services to offer restaurants, as other firms in the field do. One of its competitors, for instance, is with Caviar, which is owned by the payment processing technology company Square.

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Brita Rosenheim, a partner at the investment firm Better Food Ventures, said Grubhub traditionally had fewer options than its competitors in its integration with restaurants’ payment systems. Often, she said, a restaurant employee would have to enter orders received through Grubhub by hand.

LevelUp is much stronger in that area, she said.

“This is better for restaurants,” she said of the deal.

“LevelUp has spent a ton of time thinking about user experience and loyalty and engagement, and the fact that they’re still around speaks to the fact that they’ve done a good job of that.”

LevelUp said it would remain a distinct product operating out of its existing Boston office. The company told the Boston Business Journal in June that it had 220 employees, but representatives did not respond to an inquiry on Wednesday about employment levels.

Shares of the publicly traded Grubhub were up more than 23 percent Wednesday, ending the day at $134.73.


Andy Rosen can be reached at andrew.rosen@globe.com.