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People have figured out that Baan Thai is amazing—especially when you’re at home in your onesie and a delivery guy pulls up with piping hot tom yum soup and you can Netflix and noodle for the evening. But what if a major food delivery acquisition put Baan Thai, or another one of your favorite delivery restaurants, in a position to be bullied, jeopardizing whether or not you might be able to order from them in the future?
Just last week, Grubhub’s acquisition of Yelp’s delivery service Eat24 was finalized. Back in August, Yelp sold Eat24 to Grubhub for a cool $287.5 million. Grubhub had already merged Seamless and a few other food delivery apps, giving it monopoly status (save for UberEats and Caviar, locally).
For restaurants, that means that if they’re on one of the platforms Grubhub acquired, they’re also now on Grubhub. Logic begs the question: Why is this a bad thing? It could double, triple, or quadruple the number of orders a restaurant receives.
“They sent us an email saying we were now featured on their site, without asking,” says Tom Healy, one of the partners at Baan Thai on 14th Street. “When I told them we didn’t want to participate, I was told by a rep that I either did business with all their sites, or they would lock me out of all services in a few months.”
Healy says Baan Thai left Grubhub earlier this year, choosing to be on Eat24 instead because of its comparatively “great service and rates.” Now he feels backed into a corner. It’s Grubhub or bust, and he says his restaurant does not have the capacity to crank out meals for the increased number of customers the acquisition brings. Plus, he says, the margin on delivery is pretty small.
Asked if Eat24 restaurants would have to pay more in commission following the acquisition, a Grubhub representative tells City Paper:
“Across Grubhub and Eat24, restaurants pay a negotiable commission that is a percentage of each order they receive on the platform. We don’t make any money unless our restaurant partners do; we don’t charge anything for a presence on our platform, we only charge for the orders we send to restaurants. The average commission percentage on Grubhub is in the mid-to-high teens.”
An e-mail obtained by City Paper from a GrubHub representative to Healy confirms that the clock is ticking. It reads, “Sometimes in the months ahead you’ll be needing to have another conversation with a GrubHub rep to decide whether to lose all of your delivery orders or remain on the site.”
With GrubHub’s strategy, restaurants will either be forced into being overburdened by delivery orders, perhaps causing speed of service in dining rooms to slip, or they’ll have to decline being available for delivery on some of the more popular platforms. Neither option is good.