GrubHub recently rolled out a “Supper for Support” promotion which is strongarming client restaurants into giving customers a discount but charging restaurants their platform commission fee on the pre-discount total. This follows a so-called, widely reviled “relief program” which only defers fees, without reducing them — unlike Doordash/Caviar — and requires those suckered into it to remain on GrubHub for a full year.
The fees charged by all meal delivery services are already extreme: “typically, 20 to 30 percent per order,” sometimes more. They were often ruinous to restaurants even in better times. GrubHub’s fees can easily total more than a third of the pre-tax total, by their own calculations.
Now they are taking advantage of the desperation caused by this massive global crisis and exploiting the natural inclination of stressed, frightened, and sleepless people to reach for any lifeline, no matter how catastrophic, in the hope of keeping their lights on and their people employed. GrubHub hypocritically claims to be “supporting the restaurants you love,” while actually trying to increase their own share of the take.
The GrubHub program is “optional” for your local restaurateurs, who are struggling. It is “optional” with the unspoken subtext that if a restaurant doesn’t opt-in, other restaurants might use it to siphon business from them. It is a program that monetizes others’ suffering.
Does a 20% increase in orders sound good? Don’t be fooled. Do the math. Obviously “$10 off on orders over $30” incentivizes people to keep orders small, to maximize their discount percentages. Consider 100 $40 orders from which GrubHub would normally take 30% or $12 from each. That would leave the restaurant at $2800. Already very painful, as you can see…
…but now take those 100 orders, and apply this promotion and its vaunted “more than 20% growth.” Heck, make it 30% growth. That means 130 orders, for which customers now pay only $30. But GrubHub still takes $12 each … so the restaurant now keeps only $2340, far less than they would have made without the promotion.
Worse, the smaller the order size, the crueler the math gets for the restaurants. According to GrubHub’s 2019 results, last year it had $5.9 billion in gross food sales, and 492,300 orders per day, meaning an average order price of … $32.83. Yes, that’s right: Using the average order price from GrubHub’s own announced results, and a 30% commission rate, even with 50% order growth — double the “more than 20%” they trumpet — restaurants participating in this program will still lose. Do the math yourself.
The program outline claims “each restaurant will receive $250 from GrubHub to enable it to give $10 off any order of $30 or more,” but $250 is much less than 1% of the average restaurant’s monthly revenue. Weigh that against inflating GrubHub’s take to as much as 45%, on $30 orders, through this predatory “offer the customer a $10 discount, but pay our commissions as if you hadn’t” promotion. This $250 is an empty gesture that does not affect the numbers in any meaningful way.
This is pure price gouging by GrubHub, and making it optional isn’t much of a deal at a time when restaurants, like so many other establishments, have literally never been so needy and desperate.
Consumers want to support their local restaurants and the best way to do so is to buy directly from them. If you use a delivery service, ~20-30% of your money goes to the service rather than the restaurant. Many restaurants are now offering their own delivery, curbside pickup, etc., for the first time. Check your favorite restaurant’s website to order directly from them. If they do not offer the option to order direct, choose an option other than GrubHub!