DoorDash, Grubhub skewered by small restaurants for posting menus without permission
Third-party delivery services can help market a small business but often comes at a steep price for operators with some commissions as high as 30%
Former investment banker Carol Roth, Layfield Report CEO John Layfield and former Obama economic adviser Robert Wolf react to a report that Grubhub refunded a restaurant owner $10K after he complained about bogus fees.
Mom and pop restaurants are fed up with third-party delivery services listing their restaurants on takeout platforms without their permission.
Grubhub, Postmates and DoorDash are putting restaurants on its apps and websites without an owner's permission by accepting orders from customers and placing them on their behalf by calling the restaurant or sending a driver to place one in person. But it's causing errors in the process when delivery drivers come to pick up an order the kitchen never even received.
Some small business owners say delivery services like Grubhub are listing restaurant menus without permission causing consumer confusion. (Andrew Harrer/Getty Images).
Judy Ni, chef and owner of modern Taiwanese street food restaurant Baology in Philadelphia, has an exclusive partnership with Doordash-owned delivery service Caviar but noticed her restaurant menu was posted to other delivery platforms like Grubhub and DoorDash she never agreed to.
“We get these random delivery people walking in during peak hours saying ‘we’re here to pick up a Doordash order,’ but we don’t have an account," Ni told FOX Business. "We asked them to remove our information when we were first notified of it, it’s causing customer confusion.”
Customers typically get refunded if a third party delivery system messes up their order, but it still leaves a bad taste in their mouth about the restaurant, Ni said. "This is incredibly frustrating for us; we have no control over the reliability of the couriers and customers are complaining."
Restaurant owners around the country are experiencing similar challenges. Troy Donson, the owner of Sparks and Smoke BBQ Takeout in Reno, also lashed out at DoorDash in 2018 when it saw its menu posted on the platform without consenting to it.
"We do not and never have offered or participated with delivery services with anyone," the owner clarified in a Facebook post reported by Reno Gazette-Journal.
Ni also said that prices listed on some of the delivery services websites are not consistent with what she charges at the restaurant. Baology was still listed on DoorDash and Grubhub websites when FOX Business checked Tuesday. Listing restaurant menus without permission seems to be a way for third-party delivery services to compete in the saturated market.
“Independent, third-party research shows that more than 80 percent of sales generated through platforms like DoorDash are from new customers who would have not otherwise dined in — further enabling restaurants to thrive in the digital age,” a spokesperson for DoorDash, told FOX Business. “For those not interested in being on DoorDash for any reason, we immediately remove them from the platform upon their request.”
A spokeswoman for Grubhub said it started adding restaurants that offer takeout to its marketplace a few months ago in select cities across the country when it sees "local diner demand so the restaurant can receive more orders and revenue from deliveries completed by our drivers," adding: “If a restaurant prefers not to be on our marketplace or needs to change any information like menu items or hours, they should reach out and we'll work as quickly as possible to make necessary updates or remove them.”
GRUBHUB MAY SELL ITSELF AS ONLINE DELIVERY COMPETITION HEATS UP
Postmates also said it would take down small businesses from its platform that do not wish to be featured and refund customers who do not get their food because of it. "In the off chance a merchant wants to be removed from the platform, all they have to do is reach us and we'll remove them," a spokeswoman for the company, said in a statement.
The culinary controversy among small businesses and big-tech delivery services has been ongoing. A number of restaurants filed a class-action lawsuit in 2018 alleging that Grubhub began charging restaurants it listed on its platform for phone calls to the restaurants even when they didn’t lead to orders, Philadelphia Magazine reported. Sen. Chuck Schumer, a New York Democrat, implemented a federal investigation into complaints that Grubhub charges restaurant fees for phone calls made via its app in July. The platform also came under fire for reportedly buying restaurant web domains without the eateries' consent last year amid increased competition.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GRUB | NO DATA AVAILABLE | - | - | - |
While third-party delivery services can help market a small business and increase its customer reach, this often comes at a high cost for a small business owner, who must fork over between 15 to 30 percent commission on average on a single delivery app. The average cost for a menu item at a restaurant like Baology is between $13 to $14, which leaves a restaurant just a little over $4 if a third-party delivery service charges up to 30 percent.
“It stifles a lot of small businesses, which determine the growth of this country,” Ni said.
GRUBHUB AND THIRD-PARTY DELIVERY APPS ARE DEVOURING SMALL BUSINESSES
Still, consumer demand for delivery continues to drive the market. Sixty percent of eaters used a third-party delivery service like Doordash or Grubhub for orders, according to a survey from the National Restaurant Association and market research firm Tecnomic Inc. And consumers spent $10.2 billion on delivery services in 2018, up 42 percent from the year before, according to Technomic data.
The Business of Food explores the rapidly changing $1.5 trillion food industry every Tuesday on FOX Business.