What is going on with Seamless/Grubhub fees in NYC?

[flyinj]

Every single restaurant I used to order from has either doubled or tripled the fees they charge for delivery.

Every place I've ordered from for years that either had no delivery fee or like a $1 delivery fee have gone absolutely ballistic

Several of them are now charging $5-6 in "service fees", then on top of that $3 for delivery. That's with NO TIP added. They basically went from no delivery fee to $8 for deliver before tip.

I read that NYC forced seamless to not charge restaurants more than 15% in the last month. I would figure this would make places charge the customer less, not more.

Is this happening in other cities as well?

 

[Ryuelli]

I never really used these apps before the pandemic, but that sounds about the same as the suburbs of Houston. A $10 bill easily turns into double that once you add the tip, service fee, delivery fee, etc...

 

[WedgeX]

Is it to make up for the premium GrubHub skims off the top of their menu items?

Or does GrubHub take those fees too?

 

[Joe Shlabotnik]

They have little to no in-person revenue and GrubHub takes a huge chunk of their order money.

 

[flyinj]

I have no idea what this new $6 "service fee" is. it's not delivery, because there is a separate $3 charge for that.

I imagine this is really fucking over the people delivering as people are probably less inclined to tip after getting charged $8 for just the delivery.

 

[krae_man]

My guess is, in Pre Covid times, food delivery revenue was supplemental income on top of their main income(dining in person). They already had the cooks and whatnot there, and they could supplement their income by having them make take out orders during down time. There would be zero increased labor cost, so they could absorb some of the costs associated with the delivering of the food inside the existing food pricing(restaurants typically sell food at 200% above cost give or take) and still turn a profit.

Now that food delivery is their only source of income, the revenue/profit model is different. They need to charge you the full delivery fee or close to it in order to make enough money to stay afloat.

I have no idea what this new $6 "service fee" is. it's not delivery, because there is a separate $3 charge for that.

I imagine this is really fucking over the people delivering as people are probably less inclined to tip after getting charged $8 for just the delivery.

Click to shrink...

The resturants can't really increase their prices on delivery(eg just add 15% to prices and offer free delivery) because their customers already know what the prices are. If for example McDonalds charged $2.50 for a McDouble inside apps, people would imidiately know "hey, this is $2.19 if I buy it in store" or whatever. If you want delivery, there's an extra cost involved. You need to pay for that.

 

[flyinj]

My guess is, in Pre Covid times, food delivery revenue was supplemental income on top of their main income(dining in person). They already had the cooks and whatnot there, and they could supplement their income by having them make take out orders during down time. There would be zero increased labor cost, so they could absorb some of the costs associated with the delivering of the food inside the existing food pricing(restaurants typically sell food at 200% above cost give or take) and still turn a profit.

Now that food delivery is their only source of income, the revenue/profit model is different. They need to charge you the full delivery fee or close to it in order to make enough money to stay afloat.



The resturants can't really increase their prices on delivery(eg just add 15% to prices and offer free delivery) because their customers already know what the prices are. If for example McDonalds charged $2.50 for a McDouble inside apps, people would imidiately know "hey, this is $2.19 if I buy it in store" or whatever. If you want delivery, there's an extra cost involved. You need to pay for that.

Click to shrink...

Well, they aren't offering free delivery and increasing the prices. They are charging $3 for delivery. And on top of that, they are charging a $5 "service fee".

Are you saying that "full delivery" actually costs every restaurant $8, and before they were giving it for free?

 

[krae_man]

Well, they aren't offering free delivery and increasing the prices. They are charging $3 for delivery. And on top of that, they are charging a $5 "service fee".

Are you saying that "full delivery" actually costs every restaurant $8, and before they were giving it for free?

Click to shrink...

$8 to cover the driver and the food delivery app cut seems like a tiny amount of money to me.

 

[Fat4all]

they want you to subscribe to their subscription service things

 

[flyinj]

$8 to cover the driver and the food delivery app cut seems like a tiny amount of money to me.

Click to shrink...

Well I guess this model isn't sustainable post-covid, because the meal itself is $10. I doubt people are willing to pay twice the cost of their food to have it delivered.

I even tried calling the restaurant itself to order direct, and they told me to use the app. You would think they would happily take a phone order if the seamless fees were strangling them, but I guess not...

 

[krae_man]

Well I guess this model isn't sustainable post-covid, because the meal itself is $10. I doubt people are willing to pay twice the cost of their food to have it delivered.

I even tried calling the restaurant itself to order direct, and they told me to use the app.

Click to shrink...

Food delivery being expensive for one person is not new. Previously, they were losing money on every order you made because they wanted to advertise "free delivery on all orders". Now the market has changed and they can't afford losing money on such small orders.

 

[Khamsinvera]

It's an annoyance - in LA, I usually compare GrubHub and UberEats, but now the pricing is nearly the same on both.

Eventually, I've just resorted to ordering more (lunch + dinner) and stuff I can freeze if needed.