Delivery

Restaurants Cry Foul As Grubhub Makes Them Eat A $10 Off Deal

Grubhub sign

Days after Grubhub Inc. offered customers $10 off to support mobile food orders amid the coronavirus pandemic, restaurant owners are crying foul.

A report in The Verge on Tuesday (March 31) said while the offer sounds tempting, restaurant owners are being forced to eat the cost of the discount for every eligible order.

The online and mobile prepared food ordering marketplace announced last week that customers could order takeout or delivery through the platform and receive $10 off orders of $30 or more between the hours of 5 to 9 p.m.

But the report, written by an acknowledged son of restaurant owners who list their business on Grubhub, said fine print in the company’s “Supper for Support” initiative says while restaurants must opt into the program, they also have to agree to fund the $10 discounts. That’s about 30 percent off the cost of one order if the customer just meets the $30 minimum.

On top of that, according to the report, eateries must allow Grubhub to charge them a commission for the total cost of the order before the discount.

If restaurants want to opt out, they have to send in a form for every location if they have multiple locations, and wait two days for processing, the story said.

While Grubhub is upfront with businesses about the terms, the move is being criticized, the report said, as an attempt to profit from businesses that are struggling under the nationwide measures to limit the spread of the virus.

John Collins, a Grubhub spokesman, disputed the allegation that the company is taking advantage of restaurant owners.

The program is optional, he said, and Grubhub is clear that while they pay for marketing to drive business, eateries must pick up the cost of the promotion, and it’s capped at 100 redemptions daily.

“Grubhub is always looking for ways to increase sales for its independent restaurant partners, especially during these critical and challenging times,” Collins said in a statement. “Restaurants that chose to participate in the optional initiative have, on average, seen a more than 20 percent increase in the number of orders they have received as well as overall sales.”

As a result of the coronavirus pandemic, restaurants have been forced to close or to reduce their service to takeout and delivery only. To stay in business, they say, shops must rely on online services like Grubhub, Doordash, Caviar, Postmates, and UberEats to assist with orders and deliveries.

Grubhub has said it will postpone charging commission fees to independent restaurants in select cities, but will still eventually collect them later.

Founded in 2004, Grubhub is based in Chicago. It faces competition from a crowd of other online and mobile food delivery services that connect hungry diners with local takeout restaurants. Rival services include ChowNow, Eat24 and Deliveroo, among others.

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The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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