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Grubhub for restaurants

Grubhub for Restaurants: Pros and Cons of Using Grubhub

Last updated: June 20, 2019
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Over the last several years, online ordering and on-demand food delivery services have transformed the restaurant and dining landscape.

Companies like DoorDash, Postmates, and Uber Eats have made it possible for hungry customers to get food delivered right to their location while increasing the profits and reach of the restaurants opting to use its services.

Today we are going to look at Grubhub for Restaurants and go over some of the delivering and ordering services that Grubhub offers restaurants. We’ll also look at some of the pros and cons of restaurants using Grubhub.com and some extra tips to increase your restaurant’s profits through delivery.

What Is Grubhub for Restaurants?

Screen Shot 2019 02 08 at 1.56.50 PMGrubhub for Restaurants is what Grubhub calls the delivery and ordering services it offers restaurants. Through a collection of delivering and ordering tools, Grubhub connects restaurants with hungry customers all around the city.

By using Grubhub, restaurants can expand their footprint and make themselves visible to a whole new set of customers. By being featured on the Grubhub platform, customers can discover and order from restaurants from the comfort of their own home.

Grubhub will then deploy its drivers — who are independent contractors — to pick up the order from the restaurant and bring it right to the customer. Restaurants no longer need to worry about employing and managing their own delivery staff since Grubhub has it all under control.

But Grubhub is more than just delivery for restaurants. Grubhub offers additional services beyond delivery. Let’s take a look at how Grubhub works and the different solutions that are offered to restaurants.

How Grubhub for Restaurants Works

Grubhub provides restaurants with a set of delivery and ordering solutions that they can opt to use. The most common service is the good old fashioned Grubhub delivery. The other solution Grubhub provides is a point of sales system.

Grubhub Delivery

Grubhub delivery is the standard service of Grubhub handling the delivery process for restaurants. This means that restaurants will outsource their delivery business to Grubhub, who in turn, makes sure the entire delivery process is facilitated.

If a restaurant signs up for the delivery service, Grubhub will manage all of its deliveries, track all of its Grubhub orders, and make sure meals are delivered to customers in a timely and efficient manner.

Screen Shot 2019 02 08 at 1.56.03 PM

Restaurants don’t need to worry about compensating drivers since Grubhub handles this process also. Instead of paying drivers, restaurants will pay a fee to use Grubhub’s services.

Using Grubhub delivery helps restaurants take it to the next level, but what if a restaurant already has a fully staffed delivery team? Well, there are also other options beyond just delivery.

Grubhub Point of Sales System

Grubhub also offers restaurants a point of sales system that can integrate with the delivery experience. With the point of sales system, restaurants can improve ordering efficiency, save money, and better understand the restaurant’s financials.

By using the point of sales system, restaurants will be featured on the Grubhub platform. While restaurants would see an uptick in business if they also used Grubhub delivery, it’s not required. Customers would still be able to find the restaurant online, order their food, and receive it from the restaurant’s delivery drivers.

Screen Shot 2019 02 08 at 1.56.25 PM

The point of sales system makes it easier for restaurants to quickly change their delivery-specific menu items, increase their takeout order, and have a big-picture view of money coming in and out.

This leads us to our next topic — what do restaurants pay to use Grubhub?

What Do Restaurants Pay?

Restaurants pay commissions and fees for using Grubhub’s delivery and ordering systems. In a way, the price restaurants pay is up to them. Restaurants can decide how much commission they’ll pay on each order depending on how much service and marketing they receive.

Restaurants can choose to give 15 to 30 percent to use Grubhub delivery. Sometimes this commission can be even higher if restaurants want to bring in many orders. The more commission a restaurant pays, the higher the visibility it will have on the Grubhub platform.

As you may have noticed, there’s not a one-size-fits-all solution when it comes to Grubhub for Restaurants. Depending on each restaurant’s individual needs, restaurants are able to cherry pick which services they use and how much they want to pay.

By using some, if not all, of these services, restaurants agree to pay fees and percentages of order totals directly to Grubhub. To give you an idea, here are the fees and commissions restaurants pay to use Grubhub.

  • Prepaid Order Commission Rate: This commission depends on the level the restaurant chooses (15 to 30 percent, or more) and is charged when customers find the restaurant and order via Grubhub.
  • Delivery Commission Rate: If a restaurant also uses Grubhub delivery, this is an additional 10 percent fee added on top of the previous commission.
  • Phone Order Commission Rate: If a customer calls the restaurant with a Grubhub tracked phone number, Grubhub takes credit for this transaction and charges the previous commissions.
  • Order Processing Fee: This is a credit card processing fee that comes in at 3.05 percent with an additional $0.30 per order. This is in addition to the previously mentioned commissions and is included in every transaction.

As you can tell, there are quite a few commissions and fees that restaurants must pay, making it a tough decision for restaurants to use Grubhub. There are definitely pros and cons of using the service. Let’s take a look at a few.

Benefits of Using Grubhub

Grubhub brings forth many benefits for restaurants that decide to partner up. Among them, restaurants can expect to immediately increase the number of takeout orders, find new customers, and increase overall revenue.

To start, Grubhub claims that restaurants increase their monthly takeout revenue by up to 30 percent. It also says that the number of takeout diner orders will increase by more than 20 percent.

Additionally, Grubhub’s platform will expose restaurants to an entirely new customer base that it may not have found before. By being featured on Grubhub search listings, customers may stumble upon a restaurant that they’ve never heard about before. Grubhub is an excellent discovery tool for people who are looking to try new restaurants around town.

Lastly, Grubhub opens up marketing opportunities to restaurants, like emailing customers with targeted offers and coupons. Targeted offers to repeat customers will help restaurants strengthen customer loyalty and increase overall revenue.

But there must be some risks associated with Grubhub, right?

Risks of Using Grubhub

Partnering with Grubhub also brings along plenty of risks for restaurants. Many say that Grubhub cuts into restaurants’ profit margins, hurts a restaurant’s ability to brand itself, and decreases the amount of foot traffic restaurants receive.

First off, Grubhub makes restaurants pay a high price if they want to reap the benefits of using its service. To give you an idea, there are two different types of restaurant listings on the Grubhub platform — sponsored and unsponsored.

A sponsored listing is when a restaurant decides to give up more commissions to Grubhub in return for higher listings on the platform. The more a restaurant pays, the higher it will rank on Grubhub, and the more orders the restaurant will receive.

Unsponsored listings are those that give up a smaller percentage of order commission, typically around 15 percent. This sounds great to those who are worried about Grubhub chewing into their bottom line, however, by paying such a low commission, restaurants are virtually invisible on the Grubhub platform. The restaurant will simply be listed for customers to see on the platform, yet will unlikely be discovered by new customers since they’ll be buried in the Grubhub search rankings.

Restaurants are sometimes willing to give up nearly 40 percent of the order total just to grace the front page of Grubhub. At this point, there’s no way companies are able to make that much money with this model since they’re giving up such a big cut.

It’s also said that by allowing Grubhub to be the face of the company, it takes away a restaurant’s ability to control its own branding, customer service, and the relationship they have with loyal diners. In a way, it leaves restaurants at the mercy of Grubhub and its drivers.

Lastly, by using Grubhub restaurants may cannibalize their own sales. Some worry that those who order from a restaurant are no longer going to go to the brick and mortar location. This is extremely detrimental to a restaurant, especially since the most profitable menu items, like drinks, are ordered in person rather than delivery.

Delicious Food for All

In this day and age, customers, especially Gen Z diners, demand Grubhub delivery drivers or similar convenient services. If restaurants want to stay relevant and attract new diners, they should at least be considering delivery services like Grubhub.

Becoming a member of the Grubhub team is pretty easy. To inquire about Grubhub for Restaurants or start your new Grubhub account, you can head to this page.

If you’d like more information on Grubhub, make sure to check out our complete guide to Grubhub.

Take your delivery game to the next level!

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