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The Almighty Buck Businesses United States

Even If You're Trying To Avoid Grubhub By Calling Your Favorite Restaurant Directly, Grubhub Could Still Be Charging It A Fee (buzzfeednews.com) 106

Customers trying to avoid online delivery platforms like Grubhub by calling restaurants directly might be dialing phone numbers generated and advertised by those very platforms -- for which restaurants are charged fees that can sometimes exceed the income the order generates. BuzzFeed News reports: Here's how phone fees work: Grubhub (which also owns Seamless, MenuPages, Tapingo, and LevelUp) generates a unique phone number for each restaurant on its platform; it appears on the restaurant's Grubhub or Seamless page and redirects to the restaurant's own phone line (a restaurant cannot list its own phone number on its Grubhub or Seamless page). The redirect number can also appear higher in Google search results (including the Google panel for that business) than the restaurant's own line. This leads some customers to call it even if they don't intend to use Grubhub. Some restaurant owners have also raised this concern about Yelp, which lists Grubhub numbers, according to Vice.

This is a long-standing practice for Grubhub, which was founded in 2004 and charged a commission for phone orders before online ordering took off. When a Grubhub number is dialed, the caller hears an automated message that says "Press 1 to place an order. Press 2 for all other information." It does not mention Grubhub. After the caller is connected, the platform can charge the restaurant a fee. Each restaurant's phone order fee is a flat dollar amount based on a percentage of its average sale. Grubhub charges that fee using an algorithm (which factors in a number of things, including the length of the call) -- even, in some cases, when it did not result in an order. A restaurant owner can challenge a phone charge within a certain period of time, but the onus is on them to see which charges are erroneous.
The practice is now coming under fire as it further squeezes businesses already stretched thin by the coronavirus pandemic and the lockdowns.

"On Wednesday, the New York City Council passed a bill prohibiting platforms from charging for telephone calls in which a transaction did not take place during the state of emergency," the report says. "It also capped fees that platforms may charge restaurants for orders and deliveries during an emergency."
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Even If You're Trying To Avoid Grubhub By Calling Your Favorite Restaurant Directly, Grubhub Could Still Be Charging It A Fee

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  • by Sebby ( 238625 ) on Monday May 18, 2020 @11:44PM (#60076662)

    These 'food delivery' companies just want a slice of every transaction that occurs out there, just like Amazon, Apple, Google, Yelp and countless others.

    If this keeps up, pretty soon we'll all be subsidizing companies that abuse business owners & their own "contact" workers, while these companies don't contribute anything of significance to society (only to their real "customers", which aren't your average Joe, but instead their investors)

    P.S. anyone else call Grubhub "Grabhub" instead?

    • by PPH ( 736903 ) on Tuesday May 19, 2020 @12:05AM (#60076716)

      That's a nice little restaurant ya' got there buddy. Shame if something happened to it.

      • by Sebby ( 238625 ) on Tuesday May 19, 2020 @12:31AM (#60076804)

        That's a nice little restaurant ya' got there buddy. Shame if something happened to it.

        Yup, sounds just like Yelp.

        • Yup, sounds just like Yelp.

          Not really. Yelp can run negative reviews and hurt a restaurant's business even if the restaurant wants nothing to do with them.

          Grubhub is completely opt-in. If you don't like the deal, don't sign up.

        • That's why I only order from restaurants that aren't nice, and I, the restaurant, and GrubHub all know it!
      • and all we need to do is put it on the list used by an robo dial er

        • and all we need to do is put it on the list used by an robo dial er

          That would probably hurt small business more than grabhub. I do like the way you think, though. If it could be turned into a DOS attack that wouldn't be charged to the business, that'd be great. It may be they designed this so griefers can't affect grabhub profits.

          • As long as the dialer presses 2 for more info and stays in the grubhub phone system, instead of being connected to the restaurant and spamming them, I’m all for this plan.
            • by mysidia ( 191772 )

              The most onerous solution for GH probably involves something with spammers getting restaurant phone numbers in their "system" that don't actually belong to restaurants And are phone numbers located in one of those few high-cost destinations with an incumbent carrier who is not one of the large phone companies where receiving carrier has to pay a high call termination rate from the originating carrier per call to the receiving carrier then the spammers work to maximize the number of call minutes before GH

          • by AmiMoJo ( 196126 )

            Treat it like a phishing attack. Someone made a number that looks like the real one and people call it by mistake. Have the phone warn them and redirect them to the right number using a database.

    • They'd like.to have a piece of everything. But then again, so would I.

      Unlike me, Doordash lost $450 million last year on $900 million revenue.

      These companies are losing crazy amounts of money and will soon be gone, or completely revamp their business model. An average company would makes 11.6% profit. Doordash is at -50%. Investors are going to get tired of giving money to them for them to flush down the toilet, then the company will be gone. They can't argue economies of scale will eventually get them pro

      • Unlike me, Doordash lost $450 million last year on $900 million revenue.
        ...
        GrubHub wasn't quite as bad in 2019, though they too lost money.

        I like Sebby's suggestion--GrabHub. P'haps DoorDash can be known as PoorCash.

      • They can't argue economies of scale will eventually get them profitable; they're at nearly billion dollar scale and not anywhere NEAR profitability.

        A billion dollars is NOTHING. That is 0.3% of restaurant revenue, or one out of every 300 orders. They need to be WAY bigger than that to exploit economies of scale.

        The economies of scale kick in when a single driver can pick up multiple orders from one restaurant and take them all to the same neighborhood.

        The food delivery business needs a serious shakeout and consolidation.

      • by DarkOx ( 621550 )

        The end game is customer acquisition though. The investors are paying now to "teach the consumer" that ordering food online is done thru grubhub/doordash/postmates and looking over their aggregated menu data and definitely not visiting restaurant websites or using anything like the digital equivalent of a phone book to discover proprietors directly.

        Think of it like trying to get website traffic today while not being listed on Google. Its not really an option. We thankfully are not there yet but the investor

        • by Geekbot ( 641878 )

          I can't see how they get there. The difference between random websites about types of dolphins and a local restaurant is that one is a local restaurant. The kind of place that is close enough I drive by it on my way home, the people I work with talk about it, the local papers talk about how it's been in business 50 years. GrubHub isn't going to get me ordering food from some new place. And GrubHub has no relevance in making me aware of a local restaurant that is popular.
          I really question Grubhub as being pr

    • These 'food delivery' companies just want a slice of every transaction that occurs out there, just like Amazon, Apple, Google, Yelp and countless others.

      Slice? They want a big piece of a now smaller pie. If it was a reasonable percentage of the actual sale, I think that would be, well, reasonable.

    • I heard once that the best part about being the man in the middle is that there's always a new middle to put a man in. The US has literally stopped creating actual industries and now just creates middle men. Actual industries get shipped to China.

  • On one hand evil business practices well into extortion territory. On the other hand capitalism!

    j/k
    I only have one hand

  • Take any negative article about GrubHub with a grain of salt right now. Uber is trying to buy GrubHub, so they have a financial incentive to orchestrate a smear campaign to drop the stock price. That said, it would not surprise me if GrubHub does actually charge for phone calls, does anyone on ./ know a restaurant owner to ask and confirm?
    • In general the fees charged are around 30% of the order, which are absurd. I generally make a point to go to a place in person and ask what the best way for me to order with them is and do that. Now, I have a dozen or so places where I can text the owner my order, and simplify the whole process.

      (Although I do prefer going in person and just grunting... they know what I want anyway.)

      • I do prefer going in person and just grunting... they know what I want anyway.

        Are you Tim Allen IRL?

      • by guruevi ( 827432 )

        30% for a website, delivery and credit card handling on very small purchases? That isn't too bad. The credit card overhead is approx. 6-10%, delivery costs are ~$5-10 regardless which is easily another 10-15% of the purchase.

        • Delivery fees are on top of what they charge the restaurant.

          Considering a restraunt’s gross margin is only around 30-35%, it is a huge hit. It is appropriate if it is your only form of promotion, but beyond that it is usurious.

  • For customers who do not know how to look up the website for the restaurant, or for restaurants that have not generated a website, a private business is providing a way to connect customers to the restaurant and then charging a fee for the service.

    This is diabolical.

    Did you know that credit cards charge fees for every transaction, even if the fee is as much as the transaction?

    Or that when you click through one of the ads on /. the company often has to pay an ad fee, part of which goes to /.

    Very ofte

    • Very often one of the huge costs in business is customer acquisition.

      Except they aren't paying for customer acquisition here, they're paying because Grubhub is better at SEO than the average restaurant.

  • how is this not fraud?

    If I did something like this against say... Microsoft I think we know what would happen.

    • I'm not sure how it's fraud, particularly if the restaurants are signing up with these companies and the terms were agreed to by both parties. If anything it's Google doing a bad job at the one thing they're supposed to be good at. I don't think it would be terribly difficult for them to ensure that they aren't pulling phone numbers for restaurants from those sites.

      I recall a similar story from a while back where some company was pretending to be the restaurant and acting as a middle man without the cons
  • Since my state opened up a few weeks ago I now dine in restaurants again. Problem solved.
  • Any restaurant owner who willingly hands a shyster more money to close a sale than they make in profit, shouldn't be in business. This is 5th grade math.
  • Abusing mom n pop restaurants is bad enough any time, but right now is just pure evil. Fuck you grubhub,
  • Solution (Score:3, Interesting)

    by 93 Escort Wagon ( 326346 ) on Tuesday May 19, 2020 @01:25AM (#60076948)

    Go to the restaurant’s Facebook page.

    I kid, I kid... well maybe not. The one thing about Zuckerberg’s evil empire is - people willingly give him all their data, And his company has to do very little other than turn on the vacuum cleaner. Your local restaurant’s Facebook page is almost certainly managed by the actual restaurant. At the present time, at least. I’m sure Zuck will see this as another source of income he can exploit, soon enough.

    Anyway, if you don’t trust what you find online, just drive by the place. They’ve pretty much all got their numbers posted on signs right now, or they have menus you can grab.

    • I feel that the future somehow passed me by, because this is exactly what I do. I order pizza for home delivery, because that's home delivery food; everything else is car travel food (fast food), or sit down and enjoy yourself food. In rare cases I'll order takeout from a proper, sit-down restaurant because of shut-in relatives, but that's statistically very small number of incidents.

      I'm getting the impression these last couple of years that anyone younger than Gen X simply gets food 100% of the time, and r

      • Because there is content to binge during that 20 minutes, Jim!

      • I'm the same way as you with regard to GrubHub / Uber Eats / Delivery Du Jour. I don't see a value in using them; I'd just as soon go get the food myself.

        Currently we are getting takeout from local restaurants rather than sitting down there, obviously; but they're all places we've previously frequented and feel some connection too (plus we have some idea how they are maintained and run).

      • I prefer eat-in too, mostly because a lot of food doesn't travel well. Sometimes they package things in the most clueless way. There's nothing worse than a hot sandwich that's been wrapped up like a mummy, steamed in to a soggy mess before it even gets to you. I think this might have something to do with why Chinese food is so popular as take-out. Most stir-fried rice dishes lose nothing in the box, some of them even taste better microwaved the next day.

  • by gurps_npc ( 621217 ) on Tuesday May 19, 2020 @01:46AM (#60077014) Homepage

    They are clearly presenting a phone number as belonging to the restaurant. It doesn't. The fact they re-direct to the restaurant does not mean it isn't fraud.

    For example, many fraudulent web sites illegally fish for your password then re-direct you directly to the real website.

    Redirection does not mean you are not a dirty little thief.

    • They are clearly presenting a phone number as belonging to the restaurant. It doesn't. The fact they re-direct to the restaurant does not mean it isn't fraud.

      For example, many fraudulent web sites illegally fish for your password then re-direct you directly to the real website.

      Redirection does not mean you are not a dirty little thief.

      Except in this case the restaurant entered into an agreement with GrubHub to provide the restaurant with a re-direct number and pay for the calls received. The restaurant may have expected to get new customers, not have existing ones, use the number and thus expand their sales and has discovered the fees Grubhub charges exceeds the added revenue; and is upset by that. That's a bad business decision. The phone number is presented as way to reach the restaurant, tThe customer gets through to the restaurant a

      • by Actually, I do RTFA ( 1058596 ) on Tuesday May 19, 2020 @09:13AM (#60077908)

        Isn't GrubHub the one that signs up restaurants without their consent and inserts themselves into the customer funnel. Then GrubHub says "give us money or all your phone orders go away." You know, the phone orders people looked up on Google?

        • by Nidi62 ( 1525137 )

          Isn't GrubHub the one that signs up restaurants without their consent and inserts themselves into the customer funnel. Then GrubHub says "give us money or all your phone orders go away." You know, the phone orders people looked up on Google?

          I just ran across an article about DoorDash where a guy who owns a couple pizza shops had a storefront page created by DoorDash that he didn't know about (he only found when when some customers complained about delivery which he didn't offer), but they priced one of his pizzas wrong (they listed them for $16 while he sells them for $24). So, he got some buddies to place orders for those pizzas, paying DoorDash $16 but DD would pay his shop $24.

        • Comment removed based on user account deletion
  • Any mobster would have laughed his pants off.
    And it's all legal in the greatest country in the world.

  • I had giftcards in my account and used them for the first time. They did not apply my gift card. Customer service said, you have to do it manually.

    Obviously good at making customers spend more money.

    *%#$^#$@(%

  • If they are redirecting; they should be not only prohibited from taking a commission from Non-Orders, but they should also be required to disclose who they are and what telephone number they will actually redirect each call towards.

  • Yelp, GrubHub, and all the similar sites are fundamentally parasites. While a genuine review site would be useful, as soon as they began taking money from the companies they review (which was basically from the start), they lost any ability to claim neutrality, and hence any validity as review sites.

    GrubHub has been caught registering fake websites for restaurants that aren't even customers. It wasn't GrubHub, but a similar site that was caught in my area, actually taking reservations for a restaurant that

    • While a genuine review site would be useful, as soon as they began taking money from the companies they review (which was basically from the start), they lost any ability to claim neutrality, and hence any validity as review sites.

      Kind of weird that those types of review sites become popular, even though it means their reviews are tainted. There are plenty of other ways a review site could make money, and not be tainted.

  • It's a scam, why are these restaurants falling for a scam? Why is it _my job_ to keep them from paying for a scam?

    "We don't do orders for grubhub" is a complete sentence that incurs no fees.

    • Because then some nobody opens a grubhub service in that restaurant's name and serves crumby food and ruins it's name.

      Basically grubhub is, as one poster above stated, a modern day mob. Every time a food service is listed without permission on grubhub, they should be sued into oblivion - however most restaurants don't have the resources for that.

      -Fraud, Fraud, whoops, I guess this is America where corporations have all the rights.
  • by Ecuador ( 740021 ) on Tuesday May 19, 2020 @04:45AM (#60077384) Homepage

    If listing on GrubHub makes googling your business return a phone number that charges you fees high in the search results, why would you ever list your business on that scammy website?
    I remember when GrubHub was listing businesses themselves, but people got delisted when they went after them. But why would you list voluntarily when there are other options out there...

    • why would you ever list your business on that scammy website?

      In Soviet Russia...

    • by radarskiy ( 2874255 ) on Tuesday May 19, 2020 @09:51AM (#60078048)

      If you don't list with a delivery service, they may add you anyway.

      I read a funny story yesterday about a pizza place that did not offer delivery so DoorDash added them anyway. The funny part is that they screen-scraped the menu but mixed up the prices so they charged $16 for a pizza that they paid $24 to the restaurant to get. So the writer and his friend, the owner of the restaurant, engaged in some pizza arbatrage: themargins.substack.com/p/doordash-and-pizza-arbitrage

  • Grubhub sounds like a fucking scam. Too bad there's so many lazy motherfuckers out there that they can exist.
  • Technology should make these leeches redundant. Instead the entire industry is trying to shove itself between customers and businesses. Fuck these parasites.
    • That has become the new business model. 90% of all businesses now are just scammers trying to insert themself as a middleman into every transaction.

    • Re:Fuck middlemen (Score:4, Informative)

      by doubledown00 ( 2767069 ) on Tuesday May 19, 2020 @08:24AM (#60077758)

      Technology should make these leeches redundant. Instead the entire industry is trying to shove itself between customers and businesses. Fuck these parasites.

      All they're really doing is imitating the financial sector. Have you ever closed on a U.S. mortgage or done any kind of financial, business, or real estate transaction? Your closing statement will be filled with charges from various lawyers, escrow agents, inspectors, title companies, banks, etc. Each one inserts themselves as a transactional cost and gets a little cut.

      The tech industry is doing similar. They are inserting themselves as an extra layer to the transaction. The problem is they're getting greedy and instead of taking a tiny cut, they're creating sizable gashes.

  • How can this type of fraud be legal?

    So glad I don't use any of those scams (Grub Hub, UberEats, etc...)

    • by ytene ( 4376651 )
      I don't see how it can be anything other than fraud. .

      At a basic level, Grubhub are masquerading as the restaurant and inducing members of the general public in to an action that results in Grubhub earning fees for doing nothing.
  • by ytene ( 4376651 ) on Tuesday May 19, 2020 @08:05AM (#60077694)
    The "old style" definition of fraud was "obtaining pecunary advantage by deception", in other words, mis-representing something to a third party that results in a financial advantage.

    By advertising a telephone number on their web site and claiming it to be "the contact number" for the restaurant in question, Grubhub are, in effect, masquerading as that restaurant.

    They might try all sorts of different legal defences, but the bottom line is that if the number for a restaurant on *their* web site - or which they cause to appear in search results - is not the actual number of that restaurant, then they are using deception as a result of which they get paid.

    That's just sleazy...
  • Slashdot has run a variation of this story before. Then, and now, I don't see what is stopping a restaurant from ripping up the "bill" and telling Grubhub to lick their ass. If the restaurant didn't contract for the service and didn't agree beforehand to a charge schedule, then really what Grubhub is doing is co-opting the restaurant's identity and intellectual property.

    The end result should not be a payment, it should be a cease and desist letter followed by a lawsuit.

    • by DarkOx ( 621550 ) on Tuesday May 19, 2020 @10:42AM (#60078288) Journal

      The problem is the gubhubs of the world don't abuse the giant chains or they at least come to an understanding with upper management in those cases. Its Katie's Crepery on Main street in your little town they run their protection racket on. Katie is struggling to understand all the various health and fire codes she has to comply with, her various insurance requirements, contracts with her actual suppliers, how to correctly calculated the landed cost of each menu item, and all the other details of running a restaurant. She does not have time to time chase civil actions against grub hub or money to hire an army of lawyers to ride against theirs.

      Grubhub, Yelp, Doordash, Groupon - all those guys are fundamentally exploiting the asymmetrical nature of the situation. They know the Katies of the world have little recourse as a practical matter, they'd simply use delay tactics to keep a lawsuit running for a decade until Katie runs out cash worst case they have to settle with her for a couple hundred thou, long after her business is shuttered. The only real option is some kind of industry association to oppose these actors but that has its own anti-trust/collusion/interference issues and still represents an additional cost for little restaurants to sholder.

  • I regularly call a pizza shop within walking distance and go pickup my pizza. I found there number by searching for local pizza places in my neighborgood using duck duck go. They use apple maps which seems to pull information from yelp. The number for the pizza shop I dial was found on yelp and goes directly to the shop, not a phone directory with options. This shop also does grubhub delivery.

    It would be really nice to know if I'm still giving grubhub money in this scenario or if maybe places can put their

  • by tungstencoil ( 1016227 ) on Tuesday May 19, 2020 @05:01PM (#60079976)
    Background: I'm rather senior in product management for a mid-sized global company. My background is dev. I've worked both the tech side of the house, and the business side.

    I've sat in countless strategy meetings. Discussed lots of good ideas and bad about how to grow, expand, get more customers, get more business, where will our business go, etc. Talked to customers, competitors, etc. Put strategy together. Executed. Helped fuel double-digit growth.

    Not only have we never come up with something this sleazy, anything even approaching something like this would, at best, be laughed out of the room.

    Who the f*&# comes up with this kind of stuff? More importantly, who approves it? Can you imagine that conversation? "Hey Bob, I have an idea how we can force companies to use our business and then force them to pay for the privilege. We don't have to worry about signing them up for our service, or providing much of anything. I mean, we have a little infrastructure work to do, but it's low risk - practically a solved problem! - and no need to pay salespeople or provide any level of satisfaction." "Wow, Karen, I'm intrigued! Tell me more..."

    That's what gets me. Not that someone, or even a small group of someones, came up with this. It's that an entire corporation threw themselves behind this as the actual strategy.
  • I don't know about you, but the numbers for my favourite restaurant, pub and chippie are already in my phone, as well as copies of the take-out menu being on a shelf in the living room, including the numbers which the restaurant (etc) chose to have printed on their menus.

    Where does searching Goohoo/ Yagle for a number I already have come from. The very act of putting the number as an entry into my phone's database is what marks the place moving from the class "Yet Another Food Place" into the class "Somewh

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