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Viral post shows Grubhub fees shortchanging local restaurants

Grubhub
Posted at 8:51 PM, May 05, 2020
and last updated 2020-05-05 22:23:59-04

(WXYZ) — Many third-party food delivery apps offer free delivery and other special deals to encourage you to support local restaurants. Recently, an Illinois restaurant’s Grub Hub invoice went viral, raising questions about just how much support these apps are really providing.

As a consumer, you know you pay a fee for the convenience of having food delivered to your door from UberEats, Grubhub, Door Dash and more, but you may not know restaurants have to pay a fee also.

The Grubhub invoice, now seen around the world, shows an Illinois restaurant only pocketed $376.50 from more than $1,000 in food orders. The invoice includes a commission, a fee and special promotions. The viral Facebook post was made by Giuseppe Badalamenti of Chicago Pizza Boss Consulting, who spoke to FOX 17's sister station WYXZ in Detroit.

“The most shocking thing about these invoices is that people are using these third party apps under the assumption that everybody’s getting a fair shake," Badalamenti said. "The reality on the ground is that is not the case."

Grubhub says this invoice is an outlier, and that the restaurant owner initiated $231 in diner offers by self selecting a number of small promotions. If the owner had not chosen to initiate these promotions, he would have pocketed just over $600.

Grubhub also says that nationwide, restaurants received on average of 75% of the net sale in the month of March.

Grub Hub also says that nationwide, restaurants received on average, 75% of the net sale in the month of March.

In the midst of the pandemic, many new restaurants are signing up for third-party delivery apps. Like Park Restaurant in Lincoln Park, Michigan – they serve up Greek and American dishes using many family recipes.

“We’ve been here for over 40 years,” says Eleas Moraitis, the owner of Park Restaurant.

Serving up breakfast and lunch, from omelettes and fancy waffles, to burgers and homemade soups and Greek dishes that have been passed down for generations.

Moraitis and his family hope to keep the restaurant going for another 40 years but since the stay-at-home order was issued, it’s been tough.

“One day we’ll do OK and the next day it’s dead,” Moraitis said.

He started social media pages to reach more people and put up signs near the road to draw in traffic.

“They fly right by, so I put my sign up," Moraitis said. "I do the best I can, but they go so fast they just miss it."

He just signed up for Grub Hub to offer delivery for customers who need it.

“It’s great because there are people who can’t come, they’re locked up in their house or just not well,” Moraitis said.

He knows there is a commission and fees to pay, but it’s the only way he can offer the valuable delivery service right now.

“I just can’t compete without it,” Moraitis said.

Grubhub says the commission for a restaurant opting in for delivery starts at 10% and goes up from there depending on the services each restaurant opts into.

“Restaurant owners select the services they want and only pay a commission to Grubhub when we help generate sales," the company said in a statement to 7 Action News. "Grubhub is happy to work with restaurant partners to help them manage costs and grow their business.”

Badalamenti says there are marketing benefits to using third-party delivery apps, but you need to be very proactive to make the most of it. He offers this advice to restaurants:

1. Be very thoughtful about participating in app promotions. It may get more people to try your restaurant, but those promotions can add up.

2. With every order that comes from a delivery app, include a flyer with your restaurant phone number and menu, offering a discount if they call you directly for carry-out. Badalamenti says that can help convert delivery app customers to direct restaurant customers.

3. More than 70% of diners go to a restaurant’s website before ordering, which is why Badalamenti says it would be more cost effective to invest in expanding their website to allow customers to order food online. He says a customer ‘re-order rate’ will increase if a restaurant uses it’s own platform.

Badalamenti says he initially shared the invoice to make consumers aware, and also to encourage customers to order directly from the restaurant itself when possible.