Grubhub Gives Foodservice Retailers a Break

The third-party delivery firm won’t charge restaurants a commission if orders are placed via a direct link.

December 09, 2020

CHICAGO—Grubhub is connecting customers directly to restaurants without charging the establishments commission fees, although restaurants still must pay delivery and credit card fees, CNBC reports. The third-party delivery company now offers new tools for ordering as more localities have shuttered or severely restricted in-person dining.

The continued pandemic has hit restaurants especially hard. Recently, the National Restaurant Association estimated 110,000 locations have closed permanently or long term because of the pandemic. Third-party delivery companies often charge eateries 15% to 30% on each order. Some states like Washington have capped how much these companies can charge for delivery.

The new direct order links from Grubhub will eliminate the commission fees for orders made via the link, rather than through Grubhub’s app. Restaurants are encouraged to use the link in their own marketing efforts, such as on social media or emailed directly to customers. Grubhub will also provide a custom “order now” button for the restaurant’s website, plus a unique QR code for mailers or in-store signage.

“Even though we may fulfill the order and be the back-end technology, because we’re not providing the marketing service there, we’re not taking a commission,” said Chief Revenue Officer Seth Priebatsch.

“This is one of the ways where we know we can help them monetize better traffic that they’re already getting, that’s already visiting their website or on their email list, and we want to be their partner in turning that traffic into orders,” Priebatsch said.

NACS Research in November released its landmark “NACS Last Mile Fulfillment in Convenience Retail” study.

More than half of all convenience retailers offer some form of last-mile fulfillment, and for delivery, most are using one third-party delivery company more than others, NACS Research found in its landmark “NACS Last Mile Fulfillment in Convenience Retail” study, released in November.

NACS defines last mile fulfillment services as order fulfillment processes that deliver goods to a destination. Fulfillment could occur to the customer’s designated address (e.g. home or office), the retail parking lot (curbside pickup), lockers or in-store pickup.

The NACS study outlines the opportunity for convenience retailers to grow sales and expand customer reach via last-mile services. Download a free, digital copy of the NACS study here.

NACS Research conducts quarterly custom research with retailer members to identify key priorities and opportunities across the convenience and fuel retail landscape. For more information on NACS Research, click here.