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Groupon to launch its own food delivery and takeout service

The daily deals company is branching out into territory already covered by Uber, Yelp, Instacart and even Amazon. How will it fare against the competition?

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Groupon will compete against Amazon and other companies with its own food delivery and takeout service. screenshot by Lance Whitney/CNET

Groupon is getting into the food delivery and takeout business.

Known as Groupon To Go, the new service announced on Thursday will initially be available in Chicago where 500 restaurants have been involved in a pilot test since March, the company said in a press release. But Groupon plans to expand to other areas this year, including Boston and Austin.

At first, the service will work with restaurants that already offer delivery and takeout. But Groupon To Go VP and general manager Sean Smyth told blog site TechCrunch that the company is months away from creating its own delivery system so it can work with restaurants that don't offer one.

That all sounds tasty. But Groupon To Go is hardly a unique service. Such companies as Uber, Yelp, Instacart and Amazon offer their own food delivery and takeout services. What will make Groupon To Go stand out among the crowd?

Price is one factor. Groupon will take 10 percent off each order. The food delivery service can also integrate with Groupon's main business of daily deals since restaurants will be able to tout their own promotions. And Groupon To Go is setting itself up to operate nationwide, though that type of expansion may take awhile. Down the road, Groupon To Go will offer other options, including real-time order tracking, group ordering and the ability to arrange your delivery or takeout for a specific date and time.

"Most people get delivery and takeout multiple times a month, and with Groupon To Go, we're giving them an easy way to save money every time they do so," Sean Smyth, vice president and general manager, Groupon To Go. "Delivery and takeout is a natural extension of our local deals marketplace, adding hundreds of the best restaurants to Groupon -- including many that haven't offered online ordering until now."

To get started, Groupon To Go is working with nationwide restaurant chains such as Quiznos, Popeyes, Subway, and Papa John's along with Chicago-restaurants such as Ditka's Restaurant, Al's Beef, Adobo Grill, BIG & little's, Freshii, Rosati's Pizza, Star of Siam, and Wishbone. Groupon is also trying to round up football fans by offering a contest in which you can win a Groupon To Go office party with tailgate games and food delivered by former Chicago Bears coach and player Mike Ditka.

The inspiration for Groupon To Go came from Groupon's Food and Drink category, which is one of the company's most popular for local deals, Smyth told TechCrunch. The thousands of restaurants already offering deals were interested in advertising their own food delivery and takeout service via Groupon, a sign to Smyth that there was an opportunity here for the company to start its own such service.

In June, Groupon acquired OrderUp, an on-demand online and mobile food ordering and delivery marketplace. OrderUp benefits Groupon with its own experience in food ordering and delivery as well as partnerships with thousands of restaurants. Groupon To Go will also tap into OrderUp's technology to offer full delivery services for participating restaurants.