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Top 10 Untold Truths of GrubHub

Everyone’s ordered takeout at one point or another. Whether it was for a party or (more likely) just because you didn’t feel like cooking, dinner is just one tap away. Smartphones have revolutionized the way that we order food, and there are plenty of apps that exist to do just that. So here are the Top 10 Untold Truths of GrubHub.

10. How GrubHub Got Started

GrubHub was founded in 2004 by Mike Evans, Roman Gaskill, and Matt Maloney. The idea started when the founders were hungry and wanted a quick and easy way to get their food, and it blossomed from there. At first, it was hard getting restaurants to bite. There were already plenty of other food delivery websites, none of which got them that much traffic, so the restaurants didn’t see the value in investing their money into it. But, after some hard work, their business quickly grew. Soon, they were looking to expand their business from just their base in Chicago and add a second city. They tried to raise money for it, but it was taking too long, and the founders were growing impatient. Instead of waiting around, they decided to fly out to San Fransisco to sign up restaurants and use guerilla marketing tactics. The restaurants were receptive, and the orders started coming in aggressively. GrubHub officially opened for business in San Francisco in October 2007. Even though the company had troubles starting up in a second market, they managed to pull through by hiring a manager to help them in San Francisco. In an interview, one of the founders stated that they were one of the few internet companies for which offline advertising works well, specifically at transit hubs. People coming home from work around 6 p.m. are hungry and more susceptible to GrubHub’s message, and, well, who wouldn’t be? This company started from the bottom and managed to climb its way all the way to the top!

9. The Rise To Power

By the early 2000s, people were sick of paper menus, so restaurants decided to upgrade, first to websites where you could order food online, then to apps. Seamless was founded in 1999, Grubhub in 2004, Postmates in 2011, and DoorDash in 2012. Seamless and Grubhub merged in 2014, the same year Uber launched UberEats. Apps allowed restaurants to shift their ordering services from the phone to the internet without having to build their own websites, but soon they also outsourced delivery staff. Now, small restaurants no longer needed to hire delivery personnel themselves, with many instead choosing to strike a deal with one of the apps, which in turn would connect the restaurant with an independent contractor to pick up and deliver the food. This model has ended up being hugely successful for these third-party delivery apps: Last November, UberEats bought Postmates for $2.65 billion, and in December, DoorDash went public with one of the biggest IPOs of the year. After that, the apps raced for market share, trying to strike deals with major chains that would make them exclusive to their app. They wanted to ensure that they had more restaurants than their competitors, and the race has been cutthroat. As of November 2020, DoorDash had 50% of the market’s share of sales, with UberEats and Postmates at a combined 30%, Grubhub at 18%, and all the other services in the last one percent. But as these apps grew, so did the complaints against them.

8. The Complaints Against GrubHub

Even though delivery apps offer restaurants a good way to get some exposure, it’s not all good. Third-party delivery apps often charge processing fees per transaction, as well as commission fees, delivery fees, and subscription fees. They can also offer choice placement on their websites to restaurants that are willing to pay more. In its literature to restaurants, Grubhub says that those who choose “a higher Marketing Commission will get broader access to our diners.” Overall, most restaurants find themselves paying as much as 30% per order in fees. While these fees are clearly stated in the agreements with the restaurants, there are others that are hidden. In 2019, Philadelphia restaurant owner Munish Narula filed a class-action lawsuit against Grubhub after he discovered that his business, Tiffin, was being charged order fees anytime a call was received through a phone number provided to customers by the app. Grubhub and DoorDash have also been accused of listing ghost kitchens under the names of actual restaurants. But the biggest complaint that restaurants have is that these apps list them without actually striking a deal with the restaurant in the first place. When the customer orders food from this listing, and the food never comes, it damages the reputation of the restaurant. In October 2020, two restaurants filed a lawsuit against Grubhub, saying it caused significant damage to their hard-earned reputations, loss of control over their customers’ dining experiences, loss of control over their online presence, and reduced consumer demand for their services.

7. GrubHub Sells Girl Scout Cookies

It looks like the pandemic isn’t stopping the Girl Scouts from getting their famous cookies out to the masses. Before, you would expect a few kids to come knocking at your door, offering the best cookies known to humankind for a small, small fee. Now, though, they obviously can’t do that, so they’ve come up with a more innovative way of raising money. Instead of going door-to-door, the beloved cookies are now available by on-demand delivery. Girl Scouts USA, who officially kicked off sales in early January, collaborated with Grubhub in select areas for their 2021 cookie season in light of the pandemic. The partnership offers pickup or delivery on or the Grubhub app, making it easier than ever to procure a package of your favorite flavors. You may be thinking, how are the Girl Scouts themselves interacting with this? What skills are they gaining? Well, a spokesperson said that the Girl Scouts will get hands-on experience in managing e-commerce. They will track and fulfill orders, manage inventory, and more, using GrubHub’s technology. And, if you’re worried about your money going into the pockets of CEOs, don’t worry: GrubHub waived all fees for the organization, so all the proceeds will benefit the troops and council. What an innovative way to run their cookie program! They should invent a new badge for this.

6. Fake Disney Listings

Even though we’re told to be cautious about how we spend our money on the Internet, you certainly wouldn’t expect to be scammed through GrubHub. Well, it’s happened before, which means it can definitely happen again. According to certain sources, there are dozens of fake restaurant listings popping up on Grubhub offering delivery from restaurants that you need tickets and/or Park Pass Reservations to enter for pick-up. Dozens of fake Walt Disney World restaurant listings have popped up on Grubhub, offering magical meals that will never arrive. From celebrity chef-helmed restaurants to Epcot ice cream shops, all kinds of indulgences sold at Disney World hotels, Disney Springs dining district, and even food kiosks within Disney theme parks, are falsely listed on the food delivery app. One Twitter user said she tried to order food from the Regal Eagle Smokehouse in EPCOT via a listing on Grubhub. She was able to place the order for the fake listing, and a driver was sent out to pick it up, but it was canceled, and the location got removed from the app within a day. It appears that restaurants keep getting added to the platform without the restaurant’s permission, and this causes issues for both customers and delivery drivers. As soon as they were notified of this, GruhHub started taking down the restaurant listings, but we have to wonder about those people who ordered and never got their food. If you’re ever unsure about where you’re ordering from, be sure to call the restaurant first to make sure that they actually use GrubHub. 

5. Fake Restaurant Listings

As mentioned before, it’s not just Disney that’s being listed on GrubHub without the company’s consent; it’s tens of thousands of other restaurants. This problem became so prevalent that the law had to step in to do something about it. A California law that took effect on January 1st has prompted the removal of tens of thousands of restaurants from food delivery apps. The law, which was approved last fall, requires apps to offer delivery only from restaurants they have a direct partnership with and to pull listings from any restaurants with which they do not have a current contract. Why did this law come into place? In January 2020, the owner of San Francisco’s Michelin-star winning Thai restaurant Kin Khao, discovered that delivery services, including GrubHub, were offering food supposedly from her menu without her permission. Her tweets brought attention to this issue, to which the delivery companies admitted that they add restaurants without their permission in an effort to attract customers. The policy has been a thorn in the side for many restauranteurs, who say that the apps often publish inaccurate or out-of-date menus, and when the restaurant refuses to serve food from a long-stale menu, the apps place the blame on the restaurants instead of shouldering it themselves. Thankfully, something was done about it, so restaurant owners (in California, at least) can sleep soundly knowing that their restaurants aren’t being misrepresented.

4. GrubHub In Numbers

Did you know that there are an estimated 16 million diners using GrubHub? That’s a lot of hungry people! Not only is this good for the company, but it’s also good for the restaurants that decided to partner with them before it became big! With restaurant sales up, it means that the local economies are getting a boost. Plus, the service that they provide – letting users enjoy a convenient meal of their choice – means that the local restaurants are selling more food and bringing in more revenue. So, how many orders are there in a day? Well, when a customer places an online or mobile order for food, it’s referred to as a grub. Statistics tracked through Grubhub show that on an average day, there are 423,200 grubs being placed. When you think about it, just ten days’ worth of grubbing amounts to over four million grubs. That’s a lot of orders being placed! And if you’re wondering how many restaurants are participating, look no further! One of the reasons GrubHub is so successful is the fact that it’s partnered with over 200,000 restaurants! These companies have chosen to partner with GrubHub because it’s an easy way to get more exposure for their restaurants. It’s a win-win situation because, without participating restaurants, Grubhub wouldn’t exist today and that would leave a lot of people hungry, especially repeat grubbers who have come to rely on them for their sustenance.

3. GrubHub Drivers

If you’re looking for a job that’ll let you travel all over your city, then maybe look into working as a driver for GrubHub. The average base pay is $12 an hour, but it also comes with a few perks that’ll spice up the deal. The company offers a cash bonus that ranges between $1,000 and $2,000, with the average cash bonus per year being just over $1,400. There are also commission sharing options that can add a maximum of $2,700 to your annual salary! In total, the average salary of a delivery driver is $25,755 per year! That being said, there can be a few downsides. Some former drivers have said that the company steals tips and denies it when confronted about it. Others say that it’s difficult not getting any sick days or days off. On top of that, it’s possible to get fired without the company ever hearing your case, making it a bit of an unsteady source of income. But, if you’ve got a car, free time, and are looking to make some extra cash this year, it’s definitely an option to consider.

2. How GrubHub Makes Its Money

At first glance, it may seem weird to think that GrubHub can make any money at all. The majority of the cash made through the app indeed goes to the restaurants, but GrubHub skims a little off the top. For every meal that they process orders for and deliver, Grubhub is paid a commission. This is how they have made their astronomical profits over the years. They charge the restaurant a commission fee for each order that is placed through them. Considering the fact that they process an average of 423,000 orders a day… Well, yeah, that’s a lot of money. That being said, it’s hard to know exactly how much money GrubHub is charging restaurants. Grubhub has declined to confirm the precise amount that they charge for their services, meaning that we don’t know for sure how much they’re making per order. That being said, from what they’ve disclosed, it sounds like they make individual agreements with each restaurant as to how much they will be charged per order.

1. Thriving in the Pandemic

This one shouldn’t come as much as a surprise. Because of the pandemic, people are staying in more, and that means that they’re ordering in more. Delivery apps have been gaining in popularity and become one of the main ways people get their takeout. That obviously, means some very, very good sales. Grubhub reported third-quarter revenue that beat analysts’ estimates as the pandemic boosted the number of diners ordering delivery. Sales rose 53% to $494 million for the three months ending Sept. 30. As the pandemic keeps people home and limits indoor restaurant dining, Grubhub saw a 41% increase in the number of diners regularly ordering delivery from a year earlier. The company posted a profit, excluding some costs, of $15.2 million, or 16 cents a share. While that was a decrease from the year-earlier period, analysts had been projecting a loss of 5 cents a share. The company’s bottom line has taken a hit since it began discounting food for diners and reducing or eliminating delivery fees at the start of the pandemic to spur business and help ailing restaurant partners. 

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