Grubhub – Seamless … is it really happy eating?

You’ve ordered from Seamless and are eagerly rubbing your chopsticks together while waiting for your dynamite roll and edamame to arrive.  The doorbell rings and it begins to feel like Christmas, but is it really happy eating?

Grubhub-Seamless appears to be a godsend to the customer; you can quickly and easily order from your favorite restaurant and wait for your glorious food to arrive.  We know you paid $12.36 for that Pad Thai, but what are the other costs involved in ordering?

taking candy from a babyLike taking candy from a baby, Grubhub-Seamless charges restaurants between 10%-20% per order.  That might sound like chump change to you, but to a business whose margins are already low, it’s like $1 billion. The average profit margin is 6% per meal.  Doing simple math at a rate of 10% – 20%, many restaurants are losing out.  You might be thinking, “why is this my problem?” or “restaurants should just adjust prices accordingly”.   It is your problem because your favorite Chinese takeout could go out of business due to paying high fees in a business that already has low margins.  Raising prices doesn’t work either.  Yes, you might be okay with paying a little more, but typically when the price increases, the demand decreases – so there goes the customers.

Grubhub-Seamless also has a few questionable business practices.  Let’s put aside the fact that there merger has been questioned by local and federal governments and focus on their pricing strategy.  Grubhub-Seamless charges a higher percentage the more business a restaurant gives them.  Pedro Munoz, owner of Luz in Brooklyn, cut ties with Grubhub-Seamless when his fees rose from 10% to 14% after his monthly orders increased to over $10,000. tubesocks

Everyone knows that prices go down when quantity increases.  For example, what is the cost per pair when buying  a 4 pack of your favorite tube sock versus buying one pair?  CHEAPER! We know this, so why doesn’t Grubhub-Seamless work the same way?

power in our handsThe good news is that as a consumer, the power is in YOUR hands. And we at Foodtoeat.com, are right there beside you. We really are all about the restaurants we work with and the customers we serve.  That’s why we only charge $0.10 an order, which usually comes out to less than 1% of the order.  We want restaurants to keep their profits and be able to pass on deals to you.

By having a sustainable model for online ordering, we enable restaurants to focus on what’s important, the customer – YOU.

DailyFoodtoEat is the official blog of FoodtoEat, a sustainable online food ordering and concierge catering service featuring your favorite restaurants, food trucks and caterers. Check out the deliciousness here: www.foodtoeat.com

Sources:

Marritz, Ilya. “Food Delivery Hits The Web, But Restaurants Pay The Price.” Npr.org. Npr.org, 12 Aug. 2013. Web. 26 Sept. 2013. http://www.npr.org/blogs/thesalt/2013/08/12/211187343/food-delivery-hits-the-web-but-restaurants-pay-the-price

Brustein, Joshua. “Seamless and the Online-Takeout Trend Are Making Restaurants Queasy.”Businessweek.com. Bloomberg, 7 Aug. 2013. Web. 26 Sept. 2013. http://www.businessweek.com/articles/2013-08-07/seamless-and-the-online-takeout-trend-makes-restaurants-queasy

New York State Office of the Attorney General. Media Center. A.G. Schneiderman Announces Settlement With Seamless And Grubhub To Ensure Competition In Online Food Ordering. Http://ag.ny.gov/. 5 Aug. 2013. Web. 26 Sept. 2013. <http://ag.ny.gov/press-release/ag-schneiderman-announces-settlement-seamless-and-grubhub-ensure-competition-online

Wagstaff, Keith. “Why Ordering Online from Your Favorite Restaurant Could Be Killing It.”Theweek.com. The Week Publications, 7 Aug. 2013. Web. 26 Sept. 2013. http://theweek.com/article/index/248015/why-ordering-online-from-your-favorite-restaurant-could-be-killing-it

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s