From hidden fees to fake websites, food delivery apps, like Grubhub and Seamless, have long taken advantage of restaurants. Now, the New York City Council is working to take action against one particular delivery service. On Wednesday, November 13th, more than 30 members of the council sent a letter to Grubhub’s chief executive, Matt Maloney, to hire a third party to investigate complaints by restaurants that Grubhub has charged for the phone calls that didn’t end in orders. It is believed that Grubhub is profiting off of the “phone time” potential customers use to make inquiries about a restaurant’s menu. Essentially, when customers call a restaurant through Grubhub, restaurants are being charged — even if the customer does not place an order.
Riled Up Restaurant Owners
Legislators have long been investigating the hidden and over-the-top fees delivery services impose on restaurants. This isn’t the New York City Council’s first step to crack down on questionable delivery app practices. Grubhub has been attracting increased scrutiny over the past few months alone for its steep commission rates that can cost a restaurant anywhere from fifteen to thirty percent on an order. There has been chatter about new legislation that would regulate these commission prices, but this individual investigation on phone call charges is the NYC Council’s first concrete plan of action to fix corruption in the food app delivery world. While there is some grey area of what an acceptable commission rate looks like, charging for phone calls not resulting in orders is seen as blatant robbery by the council. The council and restaurant owners have a valid reason to be angry with Grubhub.
How Grubhub’s Phone Policy Affects Restaurants
Hard feelings aside, what does Grubhub’s questionable phone call practice mean for restaurants now and in the future? For starters, the council’s demand to hire a third party to investigate these complaints will settle any uneasiness felt about possible hidden charges. But what about restaurants who have no idea they were being taken advantage of by Grubhub? Small businesses and mom-and-pop restaurants are unfortunately taking the biggest hit in this scandal because of limited resources available for tracking Grubhub’s charges. Restaurants with a smaller staff don’t have the time to go through hundreds of phone records to pinpoint calls through Grubhub that didn’t result in orders. Likewise, businesses are unable to track calls made more than sixty days ago.
The Future of Delivery Apps
This investigation is just one of the multiple issues the company is facing this month – poor third-quarter reviews and steep competition from Uber Eats and DoorDash are illustrating a less than successful future for Grubhub. However, it’s important to note that the New York City Council is working on instilling regulations for all food delivery apps in the new year, not just GrubHub. Regardless of which platform you partner with, there will be cons. Despite their flaws, delivery apps aren’t going anywhere. They are essential for staying competitive in today’s market.