Grubhub suspends fees amid slumping dining sales
Eateries struggle to meet payroll as fear due to virus grows
Grubhub announced Friday it will suspend up to $100 million in commission fees it charges independent restaurants to help them meet payroll and rent as dining sales plunge during the coronavirus crisis.
The Chicago-based delivery service also is directing proceeds from its Donate the Change Program — which allows diners to round up the change from every order — to a disaster relief fund that will support organizations that help restaurant workers and delivery drivers. The program collects about $1 million a month.
Grubhub has more than 350,000 restaurants on its platform nationwide, the majority of them independent, the company said. The temporary suspension of the marketing commission, a portion of the cut Grubhub collects from each order made through its site, could amount to thousands of dollars in savings monthly for qualifying restaurants, CEO Matt Maloney said during a news conference alongside Chicago Mayor Lori Lightfoot.
The effort is intended to “help these restaurants be more solvent and help them to fulfill their commitments to their staff, the majority of whom are hourly workers who unfortunately will bear the brunt of this economic crisis,” Maloney said.
Grubhub partnered with Lightfoot and the mayors of Atlanta, Boston, New York, San Francisco, Seattle and Portland to devise a way to help struggling restaurants and workers weather the business downturn.
“There’s no question this will relieve the impact of restaurants here in Chicago and across the country who are suffering as a result of the fallout from the COVID-19 epidemic,” Lightfoot said.
Restaurant sales are down 40% to 70% since concerns about the coronavirus began escalating, said Sam Toia, president and CEO of the Illinois Restaurant Association. Delivery sales, which have become increasingly important to restaurants’ revenue, are expected to become even more so as people avoid going out.
“By Grubhub suspending these fees, it’s going to help the restaurants throughout our 77 communities pay their mortgages, pay the rents, but more important, make payroll,” Toia said. About 60% of Illinois’ 25,000 eating and drinking establishments offer delivery, he said. He estimates 96% of Chicago’s 7,200 restaurants are considered independent.
There were few details about how Grubhub’s disaster relief fund will be used to help restaurant employees and drivers. The company is still working with local city officials to identify organizations that can make best use of the funds.
Service and gig workers are vulnerable amid the COVID-19 epidemic because they can’t work from home and can’t afford to miss a shift, and many don’t have paid leave. While Chicago, and parts of Cook County, allow workers to accrue sick time — an hour of paid time off for every 40 hours worked, up to at least five sick days per year — the law doesn’t apply to independent contractors such as those who drive for delivery services.
Grubhub competitors DoorDash, Caviar and Postmates in recent days have announced financial protections for delivery workers.
DoorDash and Caviar, owned by the same company, are providing up to two weeks of assistance to delivery drivers who are diagnosed with COVID-19 or told to quarantine by public health officials. Postmates launched a fund that delivery workers can use to pay back medical expenses related to the coronavirus.
Instacart, the grocery delivery company, is offering up to 14 days of pay to its full-service shoppers, who are independent contractors, as well as its part-time employees if they get sick with COVID-19 or must quarantine. It also introduced a new paid sick leave policy for part-time employees.
Lightfoot called on employers to address the pressures their workers are feeling.
“From sick leave to health care, there is a clear need to be more diligent in supporting workers during this time,” she said. “The status quo simply is not going to cut it.”
Several companies, from Walmart to Amazon to McDonald’s, have recently announced measures to alleviate potential financial harm to employees affected by the coronavirus.
R.J. Melman, president of Lettuce Entertain You Enterprises, which has more than 120 restaurants across nine states, said a slow sales decline began three weeks ago, affecting mostly restaurants hurt by event cancellations, but “within the last seven days, a gigantic cliff fell off.”
Ald. Tom Tunney, 44th, a restaurauteur for 40 years, said he would equate the business hit with “a little bit 9/11, probably the crash in ’87.” But Lakeview’s restaurant and bar scene is doing well and expects a strong weekend with St. Patrick’s Day revelry.
“My reaction to some of this is I think people will go out and support their neighborhood institutions,” he said. “They know that they’re the lifeblood of the neighborhood.”
Despite the advice around social distancing, Rosa Escareno, commissioner of the Chicago Department of Business Affairs and Consumer Protection, encouraged people who are healthy not to isolate themselves and remember the small businesses that need them. Lightfoot agreed.
“My family and I plan to make sure we are patronizing restaurants to send a signal that restaurants are safe,” the mayor said.
Chicago Department of Public Health Commissioner Allison Arwady said anyone who is feeling unwell should stay home and vulnerable populations, such as the elderly and those with underlying health conditions, should avoid gatherings of more than 10 people.
But for a typical healthy family, “if you’re going into a setting that’s controlled, that’s not a huge gathering of a lot of people, there’s the ability to make sure people are washing their hands before they eat ... I’m not encouraging friends or family to not go out,” Arwady said.