- In 2019, Grubhub came under fire for its phone ordering system.
- Now the company is changing how diners call in orders. But the policy is already facing criticism.
- “It’s more trickery from Grubhub,” the New York City restaurant advocate Andrew Rigie tweeted.
- See more stories on Insider’s business page.
Grubhub is overhauling how customers place phone orders through its marketplace, a move that has already received criticism from both restaurant advocates and industry analysts.
The new “assisted-ordering” policy, announced this week, means that Grubhub customer-service representatives will process phone orders instead of depending on algorithms to route calls directly to a restaurant.
Changes go into effect on August 23 – and follow accusations in 2019 that Grubhub charged fees to clients on calls that never resulted in orders.
Back then, Grubhub came under fire when reports surfaced that it was creating shadow phone numbers and restaurant websites that would appear on search engines like Google. If a customer called the referral phone number listed on Grubhub or on search engines, for example, restaurants owners could be charged a fee – even if the call didn’t result in an order.
Grubhub’s use of shadow phone numbers was codified in contracts. But industry leaders considered the tactic a sneaky way to gin up charges made to restaurants already paying hefty delivery fees.
“It’s more trickery from Grubhub,” Andrew Rigie, executive director of the New York City Hospitality Alliance, tweeted on Wednesday of the new policy.
“They still aren’t giving restaurants the option to opt-out of them creating a secondary number where they take fees, which is problematic,” he added in an email to Insider.
Grubhub this week said restaurants “cannot opt out” of the system, which automatically generates a “routing phone number” for Grubhub clients, according to the new policy. Restaurant owners have previously complained that their real business phone numbers are not listed on Grubhub’s marketplace.
A Grubhub spokesperson told Insider that the company is “always looking to make the ordering experience easier for restaurants and diners.”
‘The restaurant may get the bad publicity and not Grubhub’
The restaurant consultant Tim Powell said he spotted other flaws in the new phone-ordering system that could harm restaurants, such as the proper training of Grubhub reps, who will be fielding calls on behalf of thousands of restaurants.
“What concerns me is if the consumer has a bad experience no matter where the fault lies, the restaurant may get the bad publicity and not Grubhub. The restaurant will not have a way to bring the consumer back,” he said. “So, no, not a great idea when trying to repair relations with restaurants.”
Grubhub has been losing market share to rivals DoorDash and Uber Eats rapidly since early 2018. It controls 16% of the delivery market, down from 49% in January 2018, according to Bloomberg Second Measure.
Analysts and former corporate employees recently told Insider that the delivery operator, a first mover in the market, relied too heavily on promoting Grubhub as a discovery channel for restaurants. That reliance made Grubhub reluctant to pursue new revenue options outside of food delivery.
That’s one reason phone orders are vital for Grubhub, as they rack up more fees and customer data for the company, which maintains that its marketplace is the key path to its profitability.
“I can understand Grubhub trying another tactic to keep its customers and get more data. This allows them to see where changes need to be made in their system as well as learn what sells to the consumer,” said Powell, the managing principal at the industry consultancy Foodservice IP in Chicago.
Other analysts said the call center is a way for Grubhub to avoid legal troubles after being hit with lawsuits for charging restaurants for calls that didn’t result in any business.
The new phone policy is also an attempt to “avoid New York and other city councils who have threatened legislation against exorbitant fees and erroneous charges for Grubhub and other order platforms,” the retail strategist DeAnn Campbell said.
Campbell pointed out that the new phone policy overwhelmingly favors Grubhub, not restaurants, with the delivery company retaining control of the transaction. Two of the three options given to customers calling a restaurant using the routed phone numbers put them in contact with a Grubhub customer-service representative.
“These tactics are borderline unethical as restaurants are being strong-armed into a delivery contract clearly weighted in favor of Grubhub, and the customer is only given the ability to reach the restaurant directly by a purposely vague ‘Press 3 for other’ option that few will understand,” she said.