Grubhub Drops Delivery Fees For Restaurants On Direct Channel
CORRECTION 2/14/23: A previous version of this article reported restaurants using the Grubhub Direct service pay a one-time fee of $99 and then $49 per month for website hosting. Grubhub sent Tasting Table a statement explaining that, while these fees were agreed to by both parties, it never actually charged any of the restaurants participating in Grubhub Direct. There is no fee for setting up the service.
It's no secret that the COVID-19 pandemic spread upheaval across the restaurant industry, forcing approximately 90,000 establishments to shut down by May 2021, per the National Restaurant Association. It turns out that May 2021 was also when Grubhub launched the Grubhub Direct app to help small restaurants. VP of agency services and products for restaurants at Grubhub, Theresa Dold, told Restaurant Dive that this platform was made to give smaller businesses "the same exact type of tools that enterprise brands have been using for decades." The commission-free platform allowed independent restaurants to set up their own Grubhub menus to get in touch with their local customer base. Small restaurant owners gained access to consumer data and individual customer profiles to manage their own marketing and branding to cater to their clientele.
With fast food chain restaurants as competitors, smaller restaurants saw business booms, claims Grubhub. The delivery service touts a number of Grubhub Direct success stories. The Italian eatery Broccolino, for instance, reportedly found that brand-new customers accounted for 86% of orders through Direct. While it was a commission-free platform, restaurants paid a flat delivery fee of $1.99 for orders that utilized Grubhub couriers, per the company. But a major change is afoot that will impact restaurants that deal with the platform.
Dropped delivery fee and easier ordering tools
Grubhub decided to waive their flat delivery fee of $1.99 paid by merchants for every order they used Direct for, according to an announcement by the company. With a notable success rate with Grubhub Direct, Grubhub continues to focus on building its relationship with merchants and small businesses.
Along with these waived delivery fees, Grubhub Direct will add new features including a smooth integration with Google Business Profiles. Now, independent restaurants will be able to add their Grubhub Direct ordering site to their Google Business Profile, which could increase sales by 20 times. Furthermore, customers will be able to use guest checkout with Grubhub Direct, meaning that they don't need to create new profiles just to make an online order. With the hassle of creating a profile or downloading an app gone, potential customers may be much more likely to order from restaurants they haven't tried before.
In some respects, these changes could be considered a 180 from the controversy Grubhub encountered in 2019. As the LA Times reported at the time, the CEO of the food delivery giant claimed that its agreements with restaurants stipulated that Grubhub could buy web domains and make websites based on individual eateries. But some restaurateurs reportedly said they hadn't consented to these sites. Grubhub was accused of blocking businesses' ability to build more of a presence online. Now, Grubhub's stated goal is to use websites to achieve the opposite.