KDKA Investigates: Local Restaurants Question Grubhub Fees During The Pandemic
PITTSBURGH (KDKA) - Over the past few days, lawmakers in several cities across the country voted to cap food-delivery app fees during the remainder of the pandemic -- fees charged to your favorite restaurant when you order with a delivery-app like Grubhub.
Seattle, San Francisco, Chicago, D.C. and New York all enforced the cap after restaurant owners complained about the high fees amid a global pandemic.
KDKA Investigator Meghan Schiller wanted to know: does Pittsburgh plan to do the same? And where is your money really going when you hit the order button?
Spencer Warren said you have to see it to believe it: "The biggest thing is the promotions here."
"They took $3,500 for promotions that we didn't sign up for," he told KDKA.
That's why Warren posted his restaurant's Grubhub invoice to social media for everyone to see.
"We lost money through the last month and we were their number one account in Pittsburgh," he says.
Warren owns The Warren Bar and Burrow and Penn Cove Eatery in downtown Pittsburgh. He said during the month of April his sushi restaurant took in $16,000 in Grubhub orders.
"And we got a total of $6,800. So it's only 42 percent of our sales we got back," he says.
He's not the only Pittsburgh restaurant owner reaching out to KDKA to talk about their recent experience.
"So we decided to go with them and it's been a disaster since the start," said John King, owner of Olympos Gyros and Catering.
Fifty-six days ago -- that's the last time a customer sat inside King's restaurant in Robinson. With no drivers of his own and struggling to survive the pandemic, King says he signed his restaurant up with Grubhub.
The orders started pouring in, but King didn't like the numbers.
"On a $28 order, we might make $5," said King.
King's invoice for the month of April shows his restaurant received 134 pre-paid orders totaling $3,812. Grubhub charged $895 in commission fees, subtracted $232 in taxes, $148 in processing fees and $260 for promotions. In the end, King earned $2,507 and Grubhub pocketed 34 percent.
"And none of that includes the wasted food costs that we have to eat," says King.
King is talking about situations like one captured on his restaurant's security camera.
"The driver stood at the door, and then he just left," said King. "He didn't even take the order or anything."
It left King with a pile of food and a fear he's losing customer loyalty.
"So they don't come back, and like I said, Grubhub still makes their money, we don't get paid and then we lose customers and then ruin our reputation on top of it," said King.
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KDKA's Meghan Schiller asked Grubhub if the company planned to reduce the fees during the remainder of the pandemic.
Grubhub said "If a restaurant wants us to deliver on their behalf, there is a 10 percent fee to provide this service that is used directly to contribute to paying our drivers. This is optional; a restaurant can choose to perform its own delivery. But the costs associated with delivery are not optional. For instance, it costs money to coordinate drivers, perform driver background checks, and create/update delivery technology."
Grubhub also pointed out it offered eligible restaurants an option to defer their marketing fees for "immediate cash flow relief." King and Spencer tell KDKA they didn't quality for that option, and neither did another place we checked.
At Iron Born Pizza on Smallman Street, Sara Boyer describes it as a complicated relationship.
"We do see a lot more foot traffic coming through this store with our Grubhub orders so that's sort of why it's the necessary evil," says Boyer.
Boyer said she wants her customers to realize where their money is going.
"If they want to really truly support local restaurants, they need to call the restaurant or order through their website," said Boyer. "That is the biggest takeaway because these third parties are taking, at the low end, 30 percent."
A price that King said he can no longer afford. He's already reached out to cancel his contract.
"And you can't just try to figure it out as you go. You know what I mean? You're dealing with people's livelihoods here," said King.
KDKA's Meghan Schiller reports that the City of Pittsburgh has yet to take a stance on this issue. Policy analysts with the city are tracking what's happening in other cities, but they're "still studying," according to a city spokesman.
The restaurant owners who talked with KDKA said they hope the city will act fast. They believe customers have a "right to know where their money is going."
