Grubhub shortchanges restaurant owners with hefty service fees

With restaurants banned from serving dine-in customers amid the coronavirus pandemic, many owners have turned to food delivery apps — like Grubhub, Postmates and Uber Eats — to facilitate their orders.

Many of those apps have seen a “definite uptick” in business over the last six weeks — but it’s apparently coming at a big cost to the restaurateurs.

In a Facebook post published this week, Giuseppe Badalamenti, a restaurant consultant and the owner of Chicago Pizza Boss, shared a snapshot of a March statement from Grubhub, which detailed just how little restaurants profit off of online orders through the app.

The unidentified restaurant, which is a client of Badalamenti, accepted $1,042.63 in 46 pre-paid orders (42 delivery and four pickup) last month. But it earned only $376.54, according to his post, which has been shared by more than 2,500 people.

“Out of almost $1,100 of orders. Your Restaurant you are trying to support receives not even $400,” Badalamenti wrote. “It is almost enough to pay for the food.”

Grubhub, which is headquartered in the Loop, charges business owners several hefty fees for its services, including a 20% marketing commission, 10% delivery commission and a 3.05% processing fee, according to its website.

In Badalamenti’s example, the restaurant was also charged $231 worth of “promotions,” though it’s unclear if the promotion was specifically for the eatery. In April, Grubhub offered its customers a $10 discount on orders of $30 or more. Though the promo was a win for customers, restaurateurs were forced to eat the cost.

“Stop believing you are supporting your community by ordering from a 3rd party delivery company,” Badalamenti wrote.

The statement also shows $131.19 worth of adjustments, which Badalamenti said are refunds or credits given to unsatisfied customers who complained that their delivery wasn’t quick enough or the food was unsatisfactory.

“There’s three thirds of a restaurant service — you capture the order, you make the food and then you deliver great service at the end. Restaurants are missing out on that third [part],” Badalamenti told the Sun-Times in a phone interview. “The food sits for 20 minutes before anybody shows up, the food doesn’t get put in bags. Yeah, Grubhub is going to say, ‘Yeah, we’re training everybody, everybody knows best practices.’ But that’s not the reality on the ground.

“The reality on the ground is that orders are late, orders are cold, people are dissatisfied and the person that pays for it is the restauranteur who had no part in that.”

Grubhub didn’t respond to a request for comment.

Badalamenti’s post has since gone viral with many commenters stunned at how Grubhub is shortchanging restaurant owners.

“Damn it’s that bad,” one man commented on the post.

“I have used GrubHub and DoorDash in the past but never again,” another person wrote. “I had no idea how much the restaurant gets shorted. When you know better you do better.”

“Create a movement of other restaurants sharing their statements,” one commenter suggested. “This could be a powerful move.”

Badalamenti, who advises his clients not to use third party delivery apps, said independent restaurants feel pressured to sign up for these delivery apps, especially because customers like them and competitors use them. It also does offer convenience if restaurants don’t have an in-house delivery system.

“The consumer is using these apps under the assumption that everybody is getting a fair shake, but that’s not what’s going on,” he said.


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