New York City restaurant owner Shivane M. says she was ready to leave GrubHub.
She owns two small locations in Brooklyn and Queens with her husband, where they serve classic American breakfast and lunch—egg sandwiches, burgers, fries. It’s a mom-and-pop shop, and they rely on phone orders for delivery to get through the slow winter months.
Shivane signed up to add both of her restaurants to GrubHub’s online delivery platform several years ago. Its services were promising: It would handle delivery orders and show her menu to new customers in exchange for a commission on each order placed through the platform. It sounds like a great deal. Restaurants can reach customers who want to order online without having to build and manage their own websites, and the platform’s marketing services can replace cumbersome, old-fashioned advertising strategies like hand-delivering take-out menus.
But over time, Shivane says, she slowly watched her profits fall, even as sales held steady. She fell behind on her bills. She just couldn’t figure out why exactly she was losing money: business was the same or better than before, she says, but she wasn’t seeing a boost to her bottom line.
So she reviewed her statements. It was obvious. GrubHub’s commission fees had been inching upward over the years she’d been working with the platform. There was the flat transaction fee, which hovered around 3 or 4 percent. Then there were marketing fees and costs for additional promotions. Shivane says she feels like the platform is increasingly pay to play: Spend more to promote your restaurant, and see your search rankings rise. Cut down on marketing spend, and watch your restaurant fall to the bottom of the page and lose sales. “It’s putting us in a financial hole. Last month, I paid $7,000 to GrubHub. That’s my rent for the month,” Shivane says. The New Food Economy viewed the company’s invoice to Shivane’s restaurant—it was actually $8,000. We agreed to use only her first name and last initial in this story because she still uses the platform and fears the company could retaliate by dropping her restaurant to the bottom of its search rankings.