If you care about your local restaurants and have the means to do so, consider calling in your order and picking it up yourself, with mask and gloves. Services like GrubHub take a huge portion (like 30%) of the ticket price just for delivery.
While I understand it is a business like many others, it'd be genuinely nice if GrubHub would stop airing their "restaurants are our family"/"support local restaurants" advertisements.
If we really want to support local restaurants (and give them better chances of post-COVID survival), we should do exactly as stated above: call in to order directly.
Do not give GrubHub, Uber Eats, and similar services a large portion of your order total just for being an easy-to-use middleman. The vast majority of restaurants around today are capable of processing payments and handling pickup/delivery themselves.
While these restaurants fight to stay alive in unprecedented times, the least we can do is put in a bit more effort for an order of food we would have placed and paid for anyway.
"Do not give GrubHub, Uber Eats, and similar services a large portion of your order total just for being an easy-to-use middleman"
Thank for the advice, but I highly value an easy-to-use middleman. How many orders would these restaurants miss out on if they didn't offer the easier option? And it's not just the ease of use (viewing the menu, adding comments, seeing real-time delivery status) but it's that fact that these services offer a centralized way to find restaurants to order from in the first place. I'm not saying I love the current balance of power, but much like with old-style taxi services, the new way is an undeniably better experience for the end user. People will never abandon the easier way, and much like with more traditional boycotts, relying on consumer action is a losing strategy for enacting change.
Those services will be there no matter what, true. And yes you can use it to discover new restaurant. But YOU, as an individual, can decide to not use them. Another thing I suggest is for you to ask the manager / owner of the small restaurant you frequently order from. Just ask point blank, would you rather me ordering it through the app or ordering through the phone. Based on their answer, you might actually change your mind.
At the end of the day, would I rather give 30% away to Uber, or would I rather pay directly the restaurant. I prefer encouraging small business, especially RIGHT NOW!
It depends what delivery service the restaurant contracts. It can be in-house, a 3rd party like Relay, or a delivery app like Doordash. But even if Doordash delivers, the restaurant still keeps more commission from the order itself if you order directly.
I didn’t know the restaurant could dispatch doordash on their own! That’s interesting.
Personally I use postmates, and with all the fees they stick on it, I’ve assumed it didn’t cost the restaurant anything. Does anyone know if this is true?
I agree somewhat. There definitely is a time where cutting profits to achieve more volume results in more revenue and profit. Not sure if it exactly is happening here but you do have a good point
Restaurants are pricing in the 30% cut, I know of no restaurants offering anywhere near a 30% price reduction for pickup - so why would I go for the more complex option? I'd love to call-in an order for a 20% reduction in price, or use a competing service for a 10% reduction.
It's entirely plausible that for many restaurants running an online ordering system/delivery network costs them 20-30% of the order price regardless.
I know that DoorDash specifically also raises the price of individual menu items by a $1 or $2 sometimes compared to paying the restaurant's menu price directly.
I've noticed higher costs too, but wondered if it had to do with having to order items separately instead of as a meal. For example, ordering a sandwich, fries, and drink, instead of a combo with the same thing.
When I found it, it was for a place called Ike's in the Bay Area. All of the individual sandwich prices were $1-$2 more than if you ordered directly from the Ike's app. It wasn't because of a combo price reduction or anything. (And funnily enough, Ike's uses DoorDash's white label delivery service to actually deliver the food.)
I stopped using Grubhub for pickup because the restaurants would consistently raise their prices on the app to make up for Grubhub's prohibitively expensive fee.
So THATS why the prices are more expensive! I don’t use Uber eats or grub hub because of this lack of transparency. I figured the app was increasing food prices and then charging me for delivery and a tip
Exactly this. GrubHub can be useful for trying out new places, but once you become a "repeat" customer, go direct. Many, many restaurants have their own online ordering systems and don't require you to make a weird phone-call. My favorite local restaurants all have ChowNow which charges restaurants a monthly fee rather than a percentage and has a grubhub-like ux. I also call in my order to the restaurants where I know the wait-staff and they always throw in extra portions for me :)
I have received “thanks for ordering directly” and “appreciate you skipping the tech leeches” when placing orders directly. So I think I’m going to go with what my local restaurants prefer.
It really pays to become a regular. Call and say "this is X give me the usual." Regulars are always treated nicer in terms of priority and portions. And since you're a regular you know what it'll cost and you can round up to the nearest $Y bill when paying.
Look I don't really understand this sentiment. This whole situation is absolutely shitty for everyone involved but I don't think the 30% cut is unreasonable.
Say I pay ~$20 dollars total for a delivery including tip. My usual Indian takeout order. A real human spends 30 minutes picking up and delivering my order and makes ~$7 (or a little less than $15/hr but not really since they're not getting a steady stream of deliveries). $4 of that order was my tip for the driver so the delivery service and the restaurant now have to divide up the remaining $9 which is already less than 70% of the menu price of what I ordered.
Unless people start getting okay with paying way more for delivery it's gonna continue being a "squeezing water from a stone" situation.
30% is totally reasonable for the cost of delivery. As you point out people hate paying for delivery in spite of the marked increase in cost/service.
Where things get complicated here is that a lot of takeout services will require businesses to offer items at the same price given to pickup/takeout orders. This constrains the restaurant's pricing while providing a large benefit to the delivery service. If the restaurant could just charge 30% more for people using the delivery service then fine. Instead they need to either make take out customers pay more which usually means making your neighbors and long term customers pay more to subsidize a large well funded company.
You might think so but I'm seeing a number of local restaurants offering free delivery if you call in your order directly so it would appear 30% is not, in fact, a reasonable cost for delivery. At least for some restaurants.
Restaurants make up for the 30% charged by apps by increasing the prices of the foods offered through the app.
None of the apps require businesses to offer items at the same price, and if they were to try an do so most restaurants would simply leave that app for one of their many competitors.
I think that's the actual complaint: the stone squeezing is happening at the expense of everyone but the customer or Grubhub. It'd be more sustainable for the actual businesses or the delivery persons if Grubhub took less of a cut or charged more of a delivery premium. (Implied: I value the sustainability of restaurants as more important than preserving the convenience/luxury of food delivery, and for edge cases where it's more of a necessity I'm sure we can come up with ways to address that.)
30% may not seem unreasonable to you as a customer and from the perspective of paying the delivery driver, but it can be deadly for the restaurant. Restaurant margins are low as it is, and an extra 30% cost on every order puts a lot of them in the negative.
You can argue that is a free market and restaurants are free to not participate if the cost is too high. Some do, at least some of the popular local spots around me are NOT on any delivery app. But most restaurants also can’t afford to not have this sales channel, especially during COVID. So now they are left in the shitty position of choosing between losing a lot of their orders and losing money on a lot of orders and hope dine in comes back soon.
It's unclear that restaurants are free to opt out. Grubhub "growth hacked" by listing restaurants that didn’t agree to be listed. The issue comes when customers aren't aware, and complain about delivery problems and seek refunds from the restaurant, who didn't agree to do delivery with Grubhub.
I wonder how that would even work from an ordering / delivery / fee perspective. If the restaurant has no partnership then there presumably isn't any integration. So if the restaurant does offer pickup, these platforms would what? Call the restaurant to place an order and then send a driver to pick it up? In this case I'd assume there wouldn't be any cut taken from the restaurant. I mean a drive can't really go to the restaurant and demand 30% off because they're picking up for grubhub.
It's not just the 30%, though. One restaurant's monthly statement[0] showed them not quite breaking even after all of the fees and charges were applied.
That said, I completely agree with the rest of your comment. We just don't want to pay what things are worth.
For anyone who doesn't want to read the above article, GrubHub took 64% of the gross, which wasn't enough to break even on just food costs.
Anyone claiming that GrubHub is only taking a 30% delivery fee and ignoring all of the other charges they tack on to reduce restaurants' income is simply lying.
Grubhub deductions were 64% of the gross. But "promotions" was 231$ which is 22% of gross. Promotions are discounts offered by the restaurants.
edit: reading further, grubhub auto-opts in the restaurants into this promotion. That's scummy, but also exists due to US auto opt-in. I believe in Europe, this wouldnt fly as they need you to explicitly opt-in, not explicitly opt-out after they implicitly opt-in. Scummy, but the american way
edit2: i think the verge, incorrectly reported in late march that restaurants "must" opt-in. from the perks program T+C. "Your participation in the Perks10 Program (the “Program” formerly known as “Supper for Support”) is optional. By electing to opt in each restaurant location identified to the Program, "
so 42% for both "advertising/marketing" (grubhub is providing the order to the restaurant). and delivery. If you link to grubhub from your restaurant's website. The advertising/marketing fee is waived
I just want the cost on the screen to be a reflection of the actual costs to bring food to my door. Let me make the judgement on whether I want to pay the delivery surcharge. Don’t obfuscate the true cost and silently punish the restaurants.
I think the only reason this model works is because people don’t actually know what is happening. I think if people knew GrubHub was running restaurants out of business they would consider alternative options.
Besides the matter of whether the cut they take is unreasonable or not, there's the matter of user experience.
Ordering on the phone is very easy. I don't need to make an account, don't need to get out my credit card, don't need to fill out my name, email address, etc. All the restaurants I order from seem to have systems that remember the address associated with incoming phone numbers, so after the first call I don't even need to tell them my address. If I order from a restaurant frequently enough, I often don't even need to tell them what I want, because they remember that too. It frequently goes "Hey, Big Joe's Pies, same as usual?" Yep. "Paying cash?" Yep. "Okay it'll be about 20 minutes." How can fidgeting around with an app compete with that?
Restaurants didn't previously have to pay this 30% charge on everything they make, because they had dine-in to balance it. Margins were already razor thin, and then the virus hit and now the only way to do business is to fork over 30% of your income to a third party, whose value add is likely not 30%.
If you live in NYC, there's a nonprofit that helps you to easily find restaurants still open for pickup / delivery and to order directly: https://www.eatnyc.org/. Restaurants keep 100% of the commission, so it really helps our favorite restaurants stay alive.
I mean... and also an entire international coordinated delivery network, apps that work on all devices, background checks, vehicle registration and checking sites, marketing, huge expensive legal departments, etc. The original algorithm behind Google search was also "pretty basic software" but there's a lot more that goes into building a successful product than writing some code.
an entire international coordinated delivery network
Why does a local restaurant care about an international delivery network?
apps that work on all devices
If by all devices, you mean iPhone and Android. Some services like Uber Eats are either not available in a browser or offer reduced functionality in the online version of their service.
background checks, vehicle registration and checking sites
It has been demonstrated many times that this is not true.
marketing
Marketing of a third party service, yes. Marketing of restaurants, no. Thus, this point is useless and arguably even detrimental to the restaurant.
huge expensive legal departments
Which does not provide support to the restaurant and thus is useless to the restaurant.
In fact, all these apps offer restaurants are vastly increased costs for minimal if any benefit.
> international coordinated delivery network, apps that work on all devices, background checks, vehicle registration and checking sites
So Uber does this but grub hub/seamless does not? The delivery folks who work for the restaurant do the deliveries for seamless and grub hub orders, at least in the NYC area.
Edit: I see now that grub hub has gotten into the business of managing the delivery as well, at least in some cases.
Note this is why places like Uber state as nitpickingly as they can: They do not deliver, and they do not taxi. They manage contracting.
There is no money to be had in actually being on the hook for having the assets to do the work. It's way easier to pawn off the depreciation to the naive sub-contractor, and pocket the middle-man's cut.
This is the key behind almost every commercial "tech" innovation. Exploit economies of scale by positioning yourself to extract fees from transactions that were not previously subject to having fees extracted. If that means facilitating more transactions than otherwise would have before so be it.
Stopping right there is enough seemingly for many business minded folks in the sense that new transactions = good; but I'm starting to realize there is definitely such a thing as toxic transactions, and it seems way more difficult for some reason to get this across to folks.
Then again, I'm getting older,and the rest of the world is becoming by and largeyounger than me. So that perspective may have more to do with me being a poor communicator than anything else.
Sure. Why don't you make a competitor then? Get yourself bought for $$$.
My guess is you'll discover it's far more difficult to onboard customers (restaurants are the customers) and consumers than you seem to think. Further, once it's mildly successful, it turns out maintenance is tough.
Edit: Looks like the "in a weekend" assertion was retracted.
I've been using this site to order from restaurants every week and sharing it with my friends. They also seem pretty responsive. I emailed them at hi@eatnyc.org to request a cuisine filter and they pushed it live the same day.
I've been a heavy Seamless user for a few years. I recently started only browsing on Seamless, and then once I decide, I go find that restaurant's ChowNow or other private hosted page and order directly. I've found on average I get better service, lower prices, and actually better quality food in some cases, where it seems like they made it fresh and sent it right away, instead of the meal sitting in an "uber eats" type car for an hour and getting cold. And, I really only have a "pool" of like, max, 12 restaurants or something. Once I make an account and put my credit card in on each site, it's exactly as easy as Seamless to go back and re-order my favorites at each place with a few clicks.
Shrug. I'm pretty sick of getting in the middle of this shit.
I'm already in the middle of it every time I eat out- having to add an arbitrary tip to the end of the my bill and always get surprised because I'm supposed to sit there and increase everything 10-20% of the menu prices.
Then I order groceries from walmart online and they try to bug me to add a $10-20 tip for every order that arrives.
Screw all of that. If the restaurants are paying too much, then they can figure it out. It's not my problem.. I'm done with it. Just show me what it costs.. telling me to go to the restaurant instead of using a service is ludicrous and pretty much defeats the purpose of delivery.
When I ordered from Costco last week, you know what they did? Increased all their prices so it included all the extra work. That way every item I ordered I could see exactly what I was paying- I didn't have a choice, which is great. I don't want the choice.
It charges an additional 15%+ for the marketing component (to get your restaurant listed and to appear higher up in search rankings).
In other words, if a restaurant sources their own customer and only uses Grubhub for delivery, they only pay 10%. This charge seems reasonable when compared to what it costs to have an inhouse courier.
"We understand that your restaurant's profit margin is already low and we don't want to reduce it even further with fees or commissions. That's why we offer this simplified, do-it-yourself ordering platform for free.
However, we do have (and continue to add to the platform) premium features that are more complex, that you can choose to pay for (if they bring extra value for your business). For example: online payments, promotions, sales optimized website, branded mobile apps."
We're not "an eatery discovery app" as our app is generally used by a single end user with a single brand (a sort of pseudo white-label) but we do service a similar market and are low priced relative to GrubHub. We don't do delivery but we do click&collect, online ordering solutions, cashless transactions for gift and loyalty, branded PWAs, Clover&Poynt integrations. Employee owned.
If you live in NYC, this nonprofit helps you find restaurants still open and order directly. Restaurants keep 100% of commission. I use it to order food every weekend. Local restaurants seem to really appreciate it.
You should reach out to them at hi@eatnyc.org! They're super responsive. I emailed them to request filtering by cuisine and they pushed it live the same day.
I don't think the market for "gig economy" is stable & mature enough to read anything like that from the delivery companies P&L. How much are they spending on expansion and various turf wars?
It's also pretty clear that delivery as a function doesn't scale linearly with check value...
I find that GrubHub will also oversubscribe their drivers by a huge amount. We tend to support restaurants more and don't use GrubHub but a few months ago we placed an order for a Thai place near us. The restaurant called and was like yah Grubhub took your order, and we'll make it, but they won't have someone here for a long time (2+ hours 10PM!) I'd cancel it.
I thought it was the owner not wanting them to take the rip but sure enough there was no sign of GrubHub going there. Calling them resulted in being connected to an offshore call center that said that we shouldn't cancel it is "in progress" but the projection was still over an hour later after we had been waiting 45 minutes. We finally cancelled and went there and got it ourselves. The restaurants I frequent often and know the owners I just call them or use their chow-now powered site. It is much more fair that way. Also saves the unpredictability of the whim of gig workers.
Honest question: what's stopping restaurants from charging 30% extra for items on GrubHub?
Transaction fees aren't new, and merchants typically bake that into the cost of doing business. Ostensibly, the end user would have to pay more for the convenience of someone else using their labor to deliver them food.
For example, from Uber's terms for UberEats restaurants[1]:
"Notwithstanding anything to the contrary in this Section 5, Merchant may not make any Item available to Customers through the Eats App at a price that is higher than the price that Merchant charges in-store for similar Items. Merchant agrees that you will not make an Item available under this Agreement at a price higher than the amount Merchant is charging for similar Items through any comparable platform for food delivery services."
That's fascinating, because out of all of the restaurants I have browsed on Uber Eats, I noticed about half had higher prices than they do on location (and generally significantly so—it wasn't uncommon to see a 20-30% difference). So they must not currently enforce it.
Edit: Even more interestingly, I rarely see this behavior on GrubHub. Maybe they have a history of enforcing it? Or are just more explicit about the rule? Or just coincidence? I'm not sure.
Every restaurant that I have seen on Uber Eats charges more for items on UberEats than they do in store. In some cases, the prices are 50% higher.
However, they don't charge more on UE than they do on competing delivery apps.
Also, the attorneys general of CA and NY have begun investigating these app pricing policies, so it's very likely they'll be deemed illegal by the end of the year.
Our office started looking for a service to use for collective ordering for about a dozen people: we tried grubhub, postmates and a few local services. We usually ordered from a set pool of local restaurants. When we started ordering prices went up considerably after a few orders. Some orders just got cancelled inexplicably and some just started adding a group service fee. We also had situations where we were limited to orders of a certain size so would have to split our groups to be able to order food for everyone. Our suspicion was that some places found ways to adjust to the demand and in some cases decided that the cost of doing business with us was too high due to some factors that were unknown to us. We also had a few of those services that dropped us as clients which is why we went through so many.
I once compared the fee across four major delivery sites for the same order at the same restaurant. It turns out, the food did vary by a few bucks between services.
My accounting is here (I mainly focused on the fee structure but the base food cost is there too)
GrubHub prevents it (or at least tries to). I think they enforce by fear, but I've seen restaurants get around it by giving smaller portions to grubhub orders than they would otherwise.
They do charge more, among other strategies. I think these sites/services drastically increase the competition for restaurants though, and I think delivery food prices are more elastic than the restaurants can handle if they increase prices to match previous net income.
> take a huge portion of the (like 30%) of the ticket price just for delivery.
At least for restaurants which don't offer delivery themselves (which is the vast majority), the delivery service may be creating more than 30% of the value of the final product. "A meal delivered to me from any restaurant within about 3 miles" is often a different product than "A meal that I need to spend 20-50 minutes going to and coming back from." Although they're similar, they aren't always substitutes for one another.
Obviously the adoption of delivery speaks for itself, but beyond that, I think if one just asked buyers how much of the value is provided by the delivery company, many or most would say over 30%. The target market does not consider it "just delivery."
I've encountered a handful of restaurants that no longer take orders by phone. In one case you call the number still printed on their pizza boxes, you get a prerecorded message telling you they only take orders from grubhub now. Sadly this means I can no longer order from them.
Sadly where I live during covid times this is not allowed :(
Some places, like bakeries and ice cream store can let people pick up orders, but food trucks for example can't, they must operate with doors (and windows in case of food trucks) closed and only send orders with delivery services of some kind.
And yes, delivery companies are expensive, a food truck owner I often chat with about business told me iFood charges them 30% of the total value, some restaurants then opt to have high food price, others just charge a lot for the delivery service, even then they might lose money (for example of they charge 5, but you buy only low margin dishes that cost 100, they lose money)
Will you also advocate for going directly to the kitchen and cutting out waitstaff when sit-down service resumes?
Advocating for cutting out the ordering/delivery company and delivery person is akin to cutting out the waitstaff since those are the ones taking your order and bringing it to you.
I wish there was a good option for delivery... but that they treat their employees and stores well, but the race to the bottom there seems to indicate there isn't.
A few stores locally have "we deliver" type messaging, but it's really just grubhub :(
While I agree with the sentiment, if people had the ability to go pick up their own orders they wouldn't be using delivery services in the first place. Remember that it's completely optional for the restaurant to even support it.
Most restaurants I see on delivery apps inflate their menu prices to compensate. And “calling in” implies that they have their own delivery people on staff, which isn’t true of the majority of restaurants that partner with these apps.
Not to forget the markup they charge from customers on the prices.
Paid 10% more even on a pick up order from a restaurant downstairs.
Learnt that the service is best used when you cannot drive to a certain place.
