Times are exceptionally difficult, especially for local restaurants that were in precarious business before the COVID-19 pandemic. But when times are tough, people contract, don't they? Or at least they don't take advantage of suffering and want to exploit it and benefit from it. Law?
We'd all like to do that, but that's not always true. A typical example: GrubHub, which Seamless owns. Do the math and you will see that they are injured and will not help. Restaurants that pretend to try to support them.
GrubHub recently launched a "Supper for Support" promotion that, to quote New York writer Helen Rosner, "causes customer restaurants to give customers a discount, but restaurants charge their platform commission fee to the total before the discount." This follows a so-called, widely slandered "aid program" that only postpones fees without reducing them – in contrast to Doordash / Caviar – and requires that those affected stay with GrubHub for a whole year.
This is how it works when restaurants grant guests a discount and digging stroke earns money with the pre-discount sums: restaurants give away free products, pay even more to GrubHub than usual. Grubhub does nothing, extracts extra money from restaurants that they claim are saving. pic.twitter.com/BhRF9ZVlHD
– Helen Rosner (@hels), March 30, 2020
The fees charged by all food delivery services are already extreme: “Usually 20 to 30 percent per order”, sometimes even more. They were often ruinous even in better times for restaurants. According to GrubHub's own calculations, fees can easily amount to more than a third of the total amount before taxes.
Now they are taking advantage of the despair caused by this massive global crisis and the natural tendency of stressed, scared and sleepless people to reach for the most disastrous lifeline, hoping to keep the lights on and keep their people busy . GrubHub hypocritically claims to "support the restaurants you love" while actually trying to increase its own share of the revenue. That is despicable.
I angrily turned to the company for a comment. No real GrubHub employee seemed to be able to bother to defend his actions, but a hired PR flack wrote back and said:
Grubhub is always looking for ways to increase the sales of its independent restaurant partners, especially in these critical and challenging times. The optional supper and support efforts do just that. In fact, local restaurants that opted to participate in the optional initiative saw an average increase in order intake and total sales of more than 20 percent. We are proud of this and will continue to try to connect them with hungry guests and expand their business.
That made me angrier. The GrubHub program is “optional” for your local restaurateurs who are interested in their love of life, just as a lifeline tied with contact poison is “optional” when it is offered to a drowning person. With the unspoken subtext, it is "optional" that other restaurants use it when a restaurant does not log in to pull business away from them. It is a program that monetizes the suffering of others.
Does a 20% increase in orders sound good? Do not be fooled. Do the math. Obviously, "$ 10 off orders over $ 30" is an incentive for customers to keep orders small to maximize their discount percentages. Consider 100 orders worth $ 40, of which GrubHub typically takes 30% or $ 12 off. That would leave the restaurant at $ 2,800. Very painful, as you can see …
… But now take these 100 orders and apply this campaign and the praised "growth of more than 20%". Damn it, make it 30% growth. That means 130 orders for which customers now only pay $ 30. But GrubHub still costs $ 12 apiece. The restaurant now only keeps $ 2,340, far less than they would have earned without the promotion.
It gets worse. The smaller the order size, the more cruel the math will be for the restaurants. According to GrubHub's 2019 results, gross food sales of $ 5.9 billion and 492,300 orders per day were generated last year, which corresponds to an average order price of $ 32.83. Yes, that's right: using the average order price from the results announced by GrubHub and a commission rate of 30%, even with order growth of 50% – twice as much as the "more than 20%" they trumpet – restaurants will who participate in this program still lose enormously. I invite you to do the math yourself.
The PR fan then proudly noted a new addendum to the program that "GrubHub will give $ 250 to every restaurant so there can be $ 10 on orders over $ 30 or more." This is even crazier. $ 250 is much less than 1% of average monthly restaurant sales. Consider inflating GrubHub up to 45% on $ 30 worth of orders. You'll quickly find that this $ 250 is an empty gesture that doesn't affect the numbers in any meaningful way.
Sometimes there is a legitimate discussion of whether it makes sense to value some items higher in times of high demand due to emergencies to increase their production and availability. This is in no way part of this legitimate discussion. This is purely a price cut by GrubHub, and the option isn't exactly a fig leaf at a time when restaurants, like so many other establishments, have literally never been so needy and desperate.
People have to eat and want to support their local restaurants. The best way to do this 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, roadside pickup, etc. for the first time.
Still, delivery services remain the best or only option for some. But if you have to use one, and if you have even a hint of human decency, you are not supporting predatory cutting that obviously hurts the people it claims to help. Instead, avoid GrubHub and Seamless from now on like – well – the plague.