Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Uber offer for Grubhub fans worries over delivery fees charged to restaurants

Stock MarketsMay 14, 2020 07:15AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Outbreak of the coronavirus disease (COVID-19), in Mexico City

By Hilary Russ and Lisa Baertlein

NEW YORK/LOS ANGELES (Reuters) - The possibility that Uber Technologies Inc (N:UBER), which runs Uber Eats, could acquire Grubhub Inc (N:GRUB) is reigniting some restaurants' worries over the commissions charged to eateries by the third-party delivery companies.

Uber is in negotiations to buy Grubhub Inc (N:GRUB) in an all-stock deal, people familiar with the matter said on Tuesday.

Some small eateries have been vocal about their distaste for the services, which sometimes charge mom and pop restaurants - already operating on thin margins - as much as 15% to 30% commissions on each order while giving discounts breaks to marquee chains like McDonald's Corp (N:MCD).

In March and April, as the coronavirus pandemic hit the United States, Grubhub added as many new partner restaurants to its platform as it did during the entire second half of 2019, Chief Executive Officer Matt Maloney said last week in a letter to shareholders.

It now has about 300,000 U.S. restaurants on its app, while Uber eats has more than 100,000 in the United States and Canada. Their merger would create the nation's largest restaurant delivery company.

In April, daily average orders via Grubhub were 20% higher than the same month last year, Maloney said.

Andrew Rigie, executive director of the New York City Hospitality Alliance, a trade association, said consolidation among third-party delivery firms "poses significant concerns."

"You get nervous when you potentially have a provider that's going to be over 50 percent of the market," said Robert Guarino, chief executive officer of 5 Napkin Burger, which has four sit-down locations in Manhattan. Most of his delivery orders come through Grubhub.

"The big question is, what happens as all these companies are trying to reach profitability, where does it come from," he said.

New York City Council on Wednesday passed an emergency bill to limit fees charged by Grubhub and other big platforms, including Uber, DoorDash and Postmates, while it continues to pursue longer-term regulations it had already been considering.

The rules would expire 90 days after a state of emergency is lifted and will limit fees paid by restaurants to 15% of an order for delivery services and 5% for non-delivery services like marketing.

Grubhub has repeatedly emphasized that it values the local restaurants that make up the vast majority of establishments on its app.

Grubhub is deferring up to $100 million of commission payments for some restaurants to a later date that the company did not disclose.

Uber Eats said it would waive delivery fees for restaurants during the pandemic, while DoorDash and subsidiary Caviar cut commission fees in half through May.

Even so, anger persists.

Chicago pizza restaurant consultant Giuseppe Badalamenti said the that mergers and industry consolidation usually give consumers "less choices and gives the companies too much power."

Two weeks ago, he posted a receipt on Facebook (NASDAQ:FB) showing that one restaurant kept just $376.54 out of $1,042.63 of Grubhub orders - the rest going to the delivery service for promotions, commissions and fees.

"Stop believing you are supporting your community by ordering from a 3rd party delivery company," Badalamenti said in the post, which went viral.

On Tuesday, Chicago enacted new rules requiring the delivery companies to give customers itemized cost breakdowns of each transaction, including commissions and service fees the restaurant pays to the apps.

Uber offer for Grubhub fans worries over delivery fees charged to restaurants

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Kaveh Sun
Kaveh Sun May 14, 2020 9:31AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The highest Grubhub fee is “promotion”. Delivery fee is not even close. Delivery fee is “deliver commission” charge on restaurant. Basically they charge “commission” on order processing, promotion, delivery, commission on the total, and “buy it now”.
David Knight
David Knight May 14, 2020 8:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
uber is china
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email