BRAZIL – 2019/05/30: In this photo illustration a Grubhub logo seen displayed on a smartphone. … [+]
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Grubhub has a new deal for struggling restaurant owners: “free exposure” on the company’s marketing platform but it comes with a catch. Restaurants must agree to a 3% marketing rate increase that takes effect on April 29, well before the industry is projected to make a financial recovery. Critics say it’s another example of how Grubhub presents itself to the public as a source of economic relief while at the same time refusing to truly address the industry’s dire financial reality.
According to an email sent by an account advisor for Grubhub and shared with Forbes, the company is offering restaurant owners an additional 5% “exposure” or visibility on the company’s marketing platform for 30 days, but only if the restaurant owner agrees to a 3% marketing rate increase to take effect on April 29.
The problem, critics say, is that no restaurant is expected to financially recover by that date, let alone be open for business as usual, as many government officials are warning the public that restrictions will likely still be in place through June. In Chicago, where Grubhub is headquartered, restaurants have been ordered closed to diners through April 30 by Illinois Governor J.B. Pritzker.
A spokesperson for Grubhub provided a statement that reads in part: The program you mention is a totally optional tool we’ve used for the last 10 years to give restaurants the ability to pay for more exposure if it makes sense for them. This is part of our platform. Some restaurants may want to take advantage of this – others may not – but any changes to the marketing commission rate are entirely optional, always changeable, and determined by the restaurant.
Meanwhile, Eater reports that Grubhub is offering another problematic deal dubbed “Supper for Support,” a promotion by which diners are offered a $10 discount as an effort to boost restaurant sales. Critics have pointed out that the discount comes out of restaurants’ already meager earnings while Grubhub commission fees remain firmly in place. The company responded that the deal was optional for its restaurant partners but added “local 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.”
The company has been criticized repeatedly for its handling of the industry’s financial crisis during this pandemic. As reported last month, the terms of Grubhub’s “$100 million economic relief” package turned out to be not a fee waiver, as many perceived, but a short-term suspension of commission fees that can range as high as 35%, fees that could be collected as early as April 13.
Eateries everywhere continue to struggle for their very survival right now, as chefs and owners find themselves working long hours to make enough money from delivery and take-out to pay their staff and other expenses. The numbers are so dire that some restaurant owners have decided to stop pursuing the delivery business altogether and close their doors, at least for the duration of the pandemic.
Restaurant owners say they’ve had no luck getting Grubhub to negotiate on fees, even though a company spokesperson suggests the terms and conditions of the deferral program may be negotiable as the situation remains “fluid.” Alex Levin, Director of Strategic Business Initiatives & Pastry Programs at Schlow Restaurant Group, says that while some platforms like UberEats have offered restaurants access to daily payouts during this time, he’s found all of these platforms unwilling to negotiate their commission fees.
Schlow has helped switched the company to online ordering through their own websites, a strategy that allows for contactless pickups and a direct delivery option through Toast point-of-sale together with DoorDash for a flat delivery fee. “This allows us to retain 100% of the sale, which is critical for our working capital needs,” he says. But little else has changed, says Levin. “I continue to reach out to Uber, Postmates, Grubhub, Caviar and DoorDash every few days, and they continue to keep the rates the same.”