The Impact of GrubHub Fees on Restaurants: An In-Depth Analysis

GrubHub and similar delivery services have garnered significant attention for their impact on restaurant profitability. Many restaurateurs are questioning whether the additional fees charged by these platforms are truly worth the business they bring. This article delves into the financial aspects of using GrubHub and other delivery services, examining the true cost of utilizing these platforms.

Understanding GrubHub Fees

GrubHub and other delivery services charge a fee for each meal delivered. This is in addition to any delivery fee that the customer pays. Typically, the fee for each meal can range from 25% to 30% of the total bill. For instance, on a $10 meal, the restaurant might pay:

25% or $2.50 for the ingredients 30% or $3.00 for labor costs 30% or $3.00 for overhead expenses (rent, utilities, equipment, etc.)

So for a $10 meal, the restaurant pays a total of $8.50 in costs, leaving them with a mere $1.50 profit.

Breaking Down the Costs

The breakdown of costs for a $10 meal:

Cost Category Percentage of Total Bill Cost Amount Ingredients 25% $2.50 Labor Costs 30% $3.00 Overhead Expenses 30% $3.00 Total Cost $8.50

When a delivery service like GrubHub charges an additional 30% fee for delivering the meal, the cost to the restaurant increases to $11.50, completely eroding the profit margin. This means the restaurant is losing $1.50 per meal sold through these delivery services.

Does It Hurt the Restaurants?

At first glance, the additional fees might seem detrimental to restaurants, but there are additional factors to consider. Many restaurants have seen their revenues plummet due to the pandemic, and delivery services have become a lifeline for many businesses to stay afloat.

Is the Additional Business Worth the Cost?

Restaurant owners must weigh the additional costs against the business they bring in. Some restaurants have raised their prices to cover the delivery costs and maintain a break-even or slight profit situation. This, combined with the value of maintaining staff morale and livelihoods, makes these services more attractive.

Second Considerations: Restoring Business Operations

Restaurants that completely shut down during the pandemic face significant challenges in restarting operations. This includes:

Hiring staff again Restocking all food supplies Setting up a new business plan to comply with local requirements Adapting a new seating system for social distancing Re-advertising to inform customers of their reopening

These costs can be substantial, potentially running into tens of thousands of dollars. For restaurants that remained open for delivery, these start-up issues are significantly reduced or eliminated.

Conclusion: Is GrubHub Hurting Restaurants?

GrubHub and similar delivery services are hurting restaurants, but not as badly as initially thought. While the fees can be significant, the additional business they bring can help keep the doors open and maintain staff. Directly picking up food from the restaurant is an alternative that can help support the business more effectively.

Additional Tips

It's worth noting that some restaurants use a forwarded number from GrubHub, meaning that even calls to the restaurant are charged. Always verify the direct restaurant phone number to avoid these additional fees.

By understanding the true costs and benefits, consumers can make informed choices that support their favorite restaurants.