‘It almost turns into a hostage situation’
Restaurant owners: Delivery services are charging them steep fees and engaging in deceptive practices
Before the coronavirus lockdowns, Matt Majesky did not take much notice of the fees that Grubhub and Uber Eats charged him every time they processed an order for his restaurant, Pierogi Mountain.
But once the lockdowns began, the apps became essentially the only source of business for the barroom restaurant he ran with a partner, Charlie Greene, in Columbus, Ohio. That was when the fees to the delivery companies turned into the restaurant’s single largest cost — more than what it paid for food or labor.
Pierogi Mountain’s primary delivery company, Grubhub, took more than 40 percent from the average order, Majesky’s Grubhub statements show. That flipped his restaurant from almost breaking even to plunging deeply into the red. In late April, Pierogi Mountain shut down.
“You have no choice but to sign up, but there is no negotiating,” Majesky, who has applied for unemployment, said of the delivery apps. “It almost turns into a hostage situation.”
Even as apps like Grubhub, Uber Eats and DoorDash
have cast themselves as economic saviors for restaurants in the pandemic, their fees have become an increasing source of difficulty for the establishments. From Chicago; Pittsburgh; and Tampa, Fla., to Boise, Idaho; Albuquerque, N.M.; and Richardson, Texas, restaurant owners have taken to social media to express their unhappiness. Some restaurants have shut down, while others have cut off the apps and are looking for other ways to take orders.
Complaints about the fees that the apps charge to both restaurants and consumers are long-standing, but the issue has become heightened as many restaurants have shut down in-room dining.
Even as they begin reopening, delivery is likely to remain a bigger part of their business than before the pandemic.
Peter Land, a spokesperson for Grubhub, said Majesky paid higher fees than normal because he had chosen to take part in marketing programs that increased his restaurant’s visibility.
“We recognize this is a difficult time for independent restaurants,” Land said. “We have redoubled our efforts to support them.”
Majesky said Grubhub had led him to believe the marketing program was one of the things it was paying for to help local restaurants, and he had not realized he would have to foot the bill. Other restaurants have voiced similar complaints.
Restaurant owners are concerned about more than the apps’ fees. In 18 interviews with restaurant owners and industry consultants, plus in lawsuits and social media posts, many said the apps also engaged in deceptive practices like setting up websites with inaccurate information for the restaurants, all without asking permission.
A Denver restaurant, Freshcraft, sued Grubhub last month, accusing it of creating websites for restaurants without their consent and then labeling them on those sites as closed or “not taking online orders” when they were open and taking online orders.
“The fact that they misrepresented my brand in these times, and pushed Grubhub clients toward other restaurants — it’s deplorable,” said Erik Riggs, who owns Freshcraft.
He is seeking classaction status for the lawsuit.
After the New York Times contacted Grubhub about the same issue at restaurants in Pittsburgh and Chicago, it took down the incorrect language. The company declined to comment on the lawsuit or the language on the sites.
One local delivery company in Texas, Favor, eliminated all commissions for independent restaurants at the beginning of the lockdowns. In contrast, the big delivery startups have advertised more limited steps they have taken to help smaller restaurants during the crisis.
DoorDash, which does most of its delivery business with big restaurant chains, said in April that it would cut its primary fees in half for all independent restaurants until the crisis passed.