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Delivery Services Under Fire for Excessive Fees During Coronavirus

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Start-up style delivery services like Grubhub, UberEats and DoorDash are all coming into focus during the pandemic, as would-be restaurant goers settle for eating their favorite takeout at home. It’s been known for some time now that these services are all funded by venture capital, and rarely (if ever) turn a profit. That start-up mentality leads to a lot of pressure for growth, sometimes at the expense of the service’s restaurants and users. A new BuzzFeed News post is pointing a finger at GrubHub. The service has been hijacking restaurant’s online information, leading to GrubHub charging restaurants outrageous commissions for orders that really should have nothing to do with the delivery service.

The way it works is simple, but devious at times. On GrubHub’s own pages, the phone number that appears actually belongs to GrubHub, not the restaurant. That number will forward callers to the restaurant, but log it in GrubHub’s system, and charge the restaurant for the referral. That part makes sense, GrubHub is providing a service to restaurants and of course that service has a price. The devious part comes from GrubHub’s immense marketing power, as the GrubHub phone number for a restaurant can appear higher in search results for the restaurant (or even on the Google panel that shows address and open hours). This means that some customers end up calling the GrubHub number, even if they are intending to contact the restaurant directly. In these cases, GrubHub ends up making money off from sales they didn’t actually generate. These fees can even accumulate when no order is placed.

GrubHub does provide some tools that allow restaurants to dispute these charges in cases when an order is not placed. However, restaurant owners or managers have to manually go through the list of charges and calls, GrubHub does not verify the calls themselves. These practices are now coming under fire as restaurants are already struggling under the weight of the pandemic. As Buzzfeed reports, the New York city council has already passed a bill that limits how much restaurants can be charged.

Consumers may not realize that they are dialing a GrubHub number, or may not realize how much restaurants are charged for each “referral” call. As one restaurant owner told BuzzFeed, “People don’t realize they are doing this, that by dialing a phone number they’re charging the restaurant [almost] $8.

GrubHub (which also owns Seamless), defends their practices, and argues that they are upfront with the fees when restaurants sign up with the service, and that they give restaurant owners the tools to review charges and customer interactions. Busy restaurant owners counter argue that “I don’t have time for that, but you have to do it”. With the pandemic only just starting to ease up after 3 months of downtime, we can understand how an extra $8 fee can make or break profitability, especially in an industry with notoriously slim margins.

Source: Buzzfeed