Grubhub Asks Restaurants to Foot the Bill on ‘Supper for Support’ Promotions

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At a time when when margins are thinner than ever, the delivery platform wants restaurants to opt into offering customers $10 off dinner orders

A new Grubhub restaurant delivery promotion called “Supper for Support” isn’t quite so supportive as it sounds. The deal, a $10 discount to diners on Grubhub orders of $30 or more from 5 p.m. to 9 p.m daily, is advertised to customers as a way to “save while supporting the restaurants you love,” a means of financially fueling the many food businesses across the country that now rely solely on delivery and pickup orders, with their dining rooms closed by government orders related to the COVID-19 pandemic.

But Supper for Support savings don’t come from Grubhub, as fine print on the promotion clarifies. The price of the discount falls instead to the restaurants that customers are being asked to assist.

“I also understand and agree that (a) Restaurant will fund the full cost of redeemed Promotions, and (b) Grubhub commissions may be charged on the non-discounted product total rather than the amount paid by the customer,” the promotion agreement clarifies.

“Wow this is fucked up even for Grubhub,” tweeted John deBary, organizer of the Restaurant Workers Community Foundation, a service worker-focused nonprofit.

A Grubhub email to restaurants announcing the Supper for Support program makes clear that they — not Grubhub — will be paying for the discounts, should they opt-in. “We’ll take care of the marketing — you cover the cost of promotions only on the orders you receive,” the email explains. Whether customers know it or not, that’s the usual for such promotions, a Grubhub representative says.

“Grubhub is always looking for ways to increase sales for its independent restaurant partners, especially during these critical and challenging times,” a Grubhub spokesperson tells Eater. “The optional Supper and Support effort does exactly that. In fact, 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.”

But doing some back of the delivery receipt math, restaurants could lose out on this deal, depending on the average size of the restaurant’s orders, and how much they’ve chosen to pay for their “marketing commission” (essentially the greater percentage of every order that restaurants kick back to GrubHub, the higher they appear in search results).

Assuming an average $60 order and a 20 percent marketing commission, plus 10 percent for the delivery commission — a total 30 percent commission to GrubHub — a restaurant would make roughly $42 on each order, or roughly $420 on 10 orders. Under Supper for Support, the restaurant would still pay 30 percent of $60, but would also eat the $10 promotional cost, bringing their revenue down to $32 per order; assuming a 20 percent bump in sales, the restaurant nets $384 on 12 orders, or less than they would’ve made without the promotion.

That sounds more like restaurants supporting Grubhub than the other way around.

It’s no secret that restaurants have been critical of Grubhub for some time now. In a class action lawsuit filed in January restaurants alleged that Grubhub was charging restaurants extraneous fees for phone calls placed through proxy numbers set up through Grubhub. Later, the company drew criticism for adding restaurants to its platform without their knowledge or consent — a practice that confused restaurants, customers, and delivery couriers alike.

But now that many restaurants depend on third-party delivery systems for their survival, can their relationship be healed? Grubhub has gestured toward good-faith efforts of support, but has yet to deliver substantive assistance. The company announced it would defer collection of up to $100 million in commissions amidst the COVID-19 crisis — but that only applies to marketing commission fees, while fine print terms and conditions include agreeing to keep Grubhub as a delivery service for one year after signing onto the program.

• Supper for Support [Grubhub]

from Eater - All https://www.eater.com/2020/3/31/21201207/restaurants-pay-grubhub-discount-support-for-supper
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