Food delivery apps are ideal for when you can’t be bothered to cook or for when you want to feed a group of friends. But thanks to the pandemic, they are seeing a surge in demand, and top delivery apps in the industry are making more profit than ever.
But does this mean that profit earned by these companies trickles down to delivery partners and restaurants? Sadly, not always. In the past, major food delivery apps like Uber Eats have been pressured to lower their commission rates.
So, how does Grubhub work in comparison?
What Is Grubhub and How Does It Work for Customers?
One of the main food delivery apps benefiting from the boom is Grubhub. Founded in 2004, Grubhub has grown to become one of the four largest delivery apps in the US, alongside Uber Eats, Postmates, and DoorDash. Grubhub serves hungry customers in over 3,200 cities across the country.
The way Grubhub works is similar to other food delivery apps that you know. Download the app, create an account, and you can start browsing restaurants and eateries near you that are partnering with Grubhub for food delivery services. Alternatively, you can go to the Grubhub website to sign up for an account and start ordering your favorite meals near you.
When you pay on Grubhub, you can select from various payment options, including debit or credit card, PayPal, Apple Pay, eGift cards, or even good old cash on delivery.
Should you tip your delivery driver when your food arrives? This article might be able to help you out.
How Does Grubhub Work for Drivers?
People who are looking for a side income can sign up to be a delivery driver with Grubhub. However, before you begin, make sure that you have your own vehicle, a valid driver’s license or state I.D. for bike riders, valid car insurance, and a smartphone. You must also be at least 19 years old to work for Grubhub.
When you have those ready, simply download Grubhub’s Grubhub For Drivers app or go on the Grubhub For Drivers webpage to create an account and attach the above relevant documents in your online application form.
After a week or so, you will receive an email reply from Grubhub notifying you of your application's outcome. When it’s approved, you will be given a delivery bag and a Grubhub t-shirt, and you are ready to go.
When you open the Grubhub For Drivers app, you will be taken to the Tasks page. Here, you can toggle your availability from ‘Unavailable’ to ‘Taking offers’ to start working.
The app has a map that shows drivers where nearby delivery hotspots are, and drivers can head to those locations to start delivering meals. For example, when Restaurant A confirms an order, drivers around Restaurant A will be notified that an order is waiting to be picked up and delivered.
How Does Grubhub Work for Restaurants?
To keep their doors open, many restaurants are now partnering with food delivery apps. Grubhub says that it has over 245,000 restaurant partners across the US and processes more than 668,000 orders daily.
If you are a restaurant owner and would like to work with Grubhub, the steps to apply are similar and equally simple. Just head on to Grubhub’s Grubhub For Restaurants page and enter your restaurant’s name, ZIP code, and other details to get started.
A sales executive from Grubhub will then reach out to ask for additional documents and a copy of your restaurant’s menu. When everything is settled, you can begin serving hundreds of hungry patrons.
However, Grubhub takes a base commission fee of 10 percent, a marketing fee of 20 percent, and processing fees of 30 cents plus 0.35 percent from restaurants. Because companies like Grubhub charge such exorbitant fees, restaurants are forced to hike up their food prices on the apps to cover the cost.
This means that you, the customer, are essentially paying for every fee in the food delivery chain: delivery fees, service fees, sales tax, advertisement fees, and other miscellaneous fees, just to keep the company and its partners running.
Does Grubhub Compensate Drivers and Restaurants Fairly?
Like its competitors, Grubhub’s employment and payment policies have been subjected to increased scrutiny due to the rise in delivery driver applications in the past couple of years.
Grubhub’s delivery drivers are considered independent contractors in the US. This means that they are technically self-employed, are free to stop working whenever they want to, and Grubhub does not have to pay for their federal unemployment and social security taxes.
Grubhub’s payouts to delivery drivers are the total sum of the following categories:
- Mileage per order
- Time spent on the road
- Mileage
- Special bonuses, known as Delivery Pay
- Tips, of which they keep 100 percent
However, the exact amount of Delivery Pay given to drivers is not specified.
On the other hand, restaurants see a large chunk of their earnings going to third party delivery apps such as Grubhub. For many, their net profit at the end of the day is just enough to cover overhead costs.
To address this, Grubhub recently introduced a marketing commission-free solution to restaurants.
If customers place an order via a direct link provided by a restaurant rather than the Grubhub app, said restaurant will not be charged the 20 percent marketing fee. But whether this has positively or negatively affected the business of Grubhub’s partners, we are yet to know.
Grubhub For Customers, Drivers, and Restaurants
Does Grubhub pay every party fairly? It is difficult to say.
For delivery drivers, payout heavily depends on the distance that they cover, how much time they devote to the hustle, and the weekly or monthly challenges on the app. For restaurants, especially smaller businesses, being on the platform has indeed helped increase their visibility, but keeping things afloat may still be a struggle.
Do bear these factors in mind next time you browse your favorite restaurant menu on a food delivery app.
Consider calling the restaurant directly to place an order for pick-up. Or better yet, if you’ve decided to cook at home more often, check out our list of the best online grocery delivery services.