From a quick read of the docs, it's just simple status management - basically a kitchen ticket tracker. Orders move from Pending to Accepted to Done and parties are notified along the way.
"Square’s standard fee of 2.75% will be applied to the total amount of each pickup sale for a limited time, until July 1st, 2014. After this time, the fee will be 8% per pickup order."
"While the 8% fee seems high compared to Square's standard 2.75% transaction fee, the average merchant fee for food ordering services is about 13.5%, McKee says. Square is offering a promotional rate of 2.75% per order through July 1."
GrubHub is a service that bolts on delivery to restaurants that may not normally deliver.
This is just a feature where Square-powered stores can offer customers the ability to place an order for a product remotely, and then be notified of when it's ready. At which point the customer can go to the physical storefront and pick up the item. There's no addition of delivery and it's not limited to food.
EDIT: Looks like GrubHub offers take-out services as well as delivery. I didn't know this because they aren't available in my city so I haven't kept up with them.
Actually GrubHub is an aggregator of restaurants that offer delivery. You browse GrubHub to find all nearby restaurants that will deliver (or offer take-out), you place your order through GrubHub, and then GrubHub relays that order to the restaurant.
In Square Pickup's case, this is an easy storefront for restaurants to offer their own online take-out interface. It looks like each restaurant gets their own white-labeled website, rather than just being a behind-the-scenes supplier to Square. You go to the website of the restaurant you want to order from and place the order directly with them.
I think this is closer to OrderAhead, which is an app that (at least in SF) a lot of restaurants use to allow you to place an order and pay for it, then just pick it up without having to wait on a register/checkout process.
(My one complaint about OrderAhead - they split any tip you give with the business, rather than just giving it all over to the business for the employees. That seems unfair to the employees.)
It seems like they currently have two products: Square Market, for online sellers, and the Square Reader, for retail point-of-sale. This product connects them, so you can use the online storefront to buy things that are delivered at the point-of-sale.
https://squareup.com/help/en-us/article/5227-accept-pickup-o...
The most interesting part to me was this:
"Square’s standard fee of 2.75% will be applied to the total amount of each pickup sale for a limited time, until July 1st, 2014. After this time, the fee will be 8% per pickup order."