New York vs. Grubhub – The New York Times

Seamless, the food delivery service started two decades ago in Midtown Manhattan, calls itself “the most New York app in New York.” In advertisements, the company cracks jokes about the L train and takes unsubtle jabs at New Jersey. “Eat Like a True New Yorker,” one subway ad declares.

But while the delivery giant Grubhub, which owns Seamless, seems to have plenty of affection for New York, that feeling may no longer be mutual.

In June, during a four-hour hearing of the New York City Council’s small-business committee, restaurant owners complained about the high commissions charged by Grubhub and other third-party delivery apps. Weeks later, Senator Chuck Schumer of New York called for a federal investigation into widespread complaints that Grubhub charges restaurants fees for phone calls that do not result in orders. And the service has faced criticism for its recently discontinued practice of creating web domains for the restaurants on its platform.

In response, Grubhub has started a website to help restaurants reclaim their web domains and has promised to let owners listen to the recordings of some phone calls that generated disputed fees. On Tuesday, the company plans to hold the first in a series of “restaurant round tables” in New York to let business owners air their concerns.

Those steps have not mollified the company’s critics.

But with Grubhub and other delivery apps gaining popularity with customers, few restaurants can afford to opt out.

“Grubhub has such huge market share that to say no, a lot of them feel like they’d be missing out on a lot of business,” said Melissa Autilio Fleischut, president of the New York State Restaurant Association. “There are lots of concerns, but I don’t know of any restaurant who says, ‘I’m not going to do it through these apps.’”

From its founding as an independent company in 1999, Seamless prided itself on maintaining healthy relationships with the restaurants on its platform, working with business owners to develop sales strategies and improve menus, according to three former Seamless employees who spoke on condition of anonymity to discuss internal company dynamics.

But the company’s culture shifted after it merged with Grubhub in 2013, the employees said, and a less sympathetic approach took hold. Sales officials at Grubhub’s headquarters in Chicago sometimes yelled at owners who called with complaints, two of the employees said.

Ms. Norris, the Grubhub spokeswoman, said any employee who yelled at a restaurant owner would be immediately disciplined.

“We depend on the success of our restaurants and work very hard to be the best partner we can be,” she said.

Another practice also concerned some Seamless employees after the merger and has recently come under scrutiny: Grubhub’s system for determining whether a phone call made through the app has generated an order. Although most customers place delivery orders by tapping their smartphone screens, Grubhub allows users to make phone calls through the app, and Yelp listings often include a Grubhub phone number alongside a restaurant’s direct number.

In December, Tiffin, a chain of Indian restaurants in the Philadelphia area, sued Grubhub, claiming that for at least seven years the company had charged restaurants on its platform for phone calls that never resulted in orders.

Marco Chirico, who runs Enoteca on Court, an Italian eatery in Brooklyn, said he recently discovered that in two months Grubhub had charged him hundreds of dollars for phone calls during which customers simply inquired about a menu item or requested a reservation. He received a refund from Grubhub, he said, but only for the phone calls whose recordings he had reviewed.

“Now I have to take my time or pay someone extra to go through all the transactions and phone calls to see whether they were orders or reservations,” Mr. Chirico said. “It can hurt you at the end of the month.”

Over the years, Grubhub has publicly acknowledged that it uses an algorithm to determine whether a phone call resulted in an order rather than reviewing the transcript of every call. The company decides whether to charge restaurants based on a range of factors, including the length of the call and whether the customer who made it also placed an online order that day, according to Ms. Norris, the spokeswoman.

“We are constantly refining these systems and processes to ensure we are optimizing for accuracy,” she said.

In August, Grubhub announced that it would double the time it gives restaurants to review phone calls, from 60 to 120 days, and would refund inaccurate charges. But the 120-day window won’t ensure that restaurants recover their losses, Mr. Enrico said. “It doesn’t help with the thousands of dollars you lost in prior months,” he said. “You should fix the past to move forward.”

The fees are expected to be one of the main topics of discussion at the first restaurant round table, which will be hosted by a Grubhub executive, Kevin Kearns, at the company’s office in Manhattan on Tuesday afternoon.

Over the summer, restaurant owners also began questioning another Grubhub practice: purchasing internet domain names for thousands of restaurants so that customers searching for them online would be directed to place orders through the delivery service. Ms. Norris, the Grubhub spokeswoman, said the company discontinued that policy in 2018 and, in any case, always got restaurants’ permission to establish such “microsites.”

But in June, an article in the industry publication New Food Economy detailing the practice led to an outcry from restaurant owners who said they had not realized that joining Grubhub essentially meant signing away the rights to their online identities. To reclaim control over their digital profiles, some owners are working with ChowNow, a California-based company that helps restaurant owners develop their own apps, charging a monthly subscription fee rather than a per-order commission.

“Restaurants are waking up and saying, ‘I need to own my website, I need to own my customers, I need to own my identity online,’” said Chris Webb, who runs ChowNow.

Haruki Kai, the co-owner of Sushi Ryusei in Manhattan, said Seamless has benefited his fledgling business, generating around $1,500 a month in profits. But given the popularity of online delivery, Mr. Kai said he believes that number should be even higher. He now offers a 10 percent discount to customers who bypass Grubhub and order through his ChowNow app instead.

“For now, we are O.K.,” Mr. Kai said, “but still 30 percent is too high a fee.”

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