Cost Breakdown: How Much Does Grubhub Cost?
These days you can get nearly all of your favorite restaurant meals delivered right to your door.
The convenience of online food delivery has opened doors not only for customers but also delivery drivers looking for employment and restaurants looking to expand their footprint.
The food delivery service of choice for many hungry customers and hustling delivery drivers is Grubhub.
But of course, nothing in this world comes free. We tracked down all of the costs associated with using Grubhub so you can decide if the service is worth it for you. So how much does Grubhub cost?
- Customer Costs
- Delivery Driver Costs
- Restaurant Costs
While Grubhub makes mealtime that much easier, the service does come at a cost. Specifically, customers can expect to pay a delivery charge, minimum order amount, and an optional driver tip.
Customers are able to try new delicious local restaurants all around their city from the convenience of their own home, saving users time and hassle. Grubhub provides access to delivery options that restaurants previously didn’t offer.
But as we mentioned before, the Grubhub service does come at a cost. Let’s take a look at each of these.
Depending on which restaurant you deliver your meal from, there’s a good chance you’ll have to pay a delivery fee that typically doesn’t exceed $7.00.
Whether or not you have a delivery charge on your order is up to the restaurant you order from. The restaurants, not Grubhub, each decide what the delivery charge will be.
For some restaurants, that want to start getting as many orders as possible, there won’t be a delivery charge. For others, the delivery charge typically ranges between $1.00 and $10.00.
Minimum Order Amount
In some cases, there will be a minimum order amount that you’re required to pay to receive a delivery order. Depending on which restaurant it is, the minimum order amount will vary.
If your order doesn’t meet this minimum, you’ll need to add additional items to meet the threshold.
Grubhub will sometimes make recommendations that will help you meet your goal without spending too much more money.
While tipping is not required with Grubhub, we strongly recommend that you do so. The default tip amount is set at zero, but customers have the option of tipping as much as they want.
Even though on the mobile app the default tip amount is set at zero dollars, when checking out of a delivery order, customers can choose to add on a tip.
The options you’ll be given are a 5, 10, or 15 percent tip, and also an additional option of adding a custom tip amount.
It’s important to understand that while yes, Grubhub drivers do get paid for each delivery they complete, they’re still providing a service and tipping etiquette should adhere to regular standards. If it were up to us, we’d add on 15 percent to reward a job well done.
This leads us to our next topic of how much drivers get paid and what it costs to deliver for Grubhub.
Delivery Driver Costs
Driving for Grubhub is an excellent way to make cash on the side or even drive full-time for the delivery platform. It enables flexible employment where you choose your own hours and are empowered by being your own boss.
There are plenty of upsides to being a delivery driver, however, there are definitely some costs associated with delivering Grubhub orders.
If you’re new to driving, make sure you check out all of the driver requirements to see if it’s right for you.
Let’s take a look at how much drivers are paid and what expenses will come up.
How Much Are Drivers Paid?
Drivers are paid $3.00 to $4.00 for each delivery they complete, $0.50 per mile driven between the restaurant to the order destination, and 100 percent of additional tips that are added on by the customer.
The payment structure can be summed up with this equation below:
Per order rate + $0.50 per mile from restaurant to customer + 100% of tips
The delivery rates that drivers are paid vary between cities and markets but are generally in the $3.00 to $4.00 range. In some cities, drivers are paid more and in others, they’re paid less.
Also, it’s important to note that drivers are only paid for the miles they drive from the restaurant to the delivery destination. This doesn’t include any additional miles that are put on your vehicle before and after your deliveries.
The miles you put on your vehicle are one of these extra expenses you must pay, as well as a few more we’ll detail below.
The overall wear and tear drivers put on their vehicle, the cost of vehicle insurance, and the income taxes that must be paid at the end of the year all contribute to the costs that drivers must pay.
First off, driving for Grubhub will take a toll on your vehicle. If you’re a serious driver, you’ll be putting a good deal of start and stop miles on your ride. All general maintenance that comes up will all be paid out of pocket. Grubhub does not assist with these costs in any way.
Outside of the routine vehicle maintenance, another vehicle cost you’ll need to consider is your liability auto insurance. Insurance is required to drive for Grubhub, but they won’t cover this cost either.
Lastly, since you’ll be an independent contractor, you’ll be required to pay income taxes at the end of the year. This means that you’ll need to plan accordingly and set money aside for this expense once tax season rolls around.
So where do the restaurants net out with all of this? How much are restaurants paying to use Grubhub?
For many restaurant owners, the benefits far outweigh the costs of using Grubhub. For others, the costs are just not worth it and they opt for using other delivery companies, like Uber Eats, DoorDash, or Postmates, using their own delivery service, or not using any delivery service at all.
Why Restaurants Use Grubhub
Grubhub helps partner restaurants increase their revenues, extends their marketing abilities, and helps them reach new customers.
According to Grubhub, restaurants who start using the platform will increase their average monthly takeout revenue by 30 percent after only one year.
This increase is likely attributed to the fact that Grubhub exposes restaurants to an entirely new set of customers.
In many cases, customers are finding new restaurants by using Grubhub. For restaurants, this means that these newly acquired customers came as a result of the exposure Grubhub gives them through Grubhub’s website, marketing tools, and delivery platform.
Even though Grubhub does help restaurants increase their customer reach and revenue, the exposure will be costly.
What Do Restaurants Pay?
Restaurants have control over the level of Grubhub service they’ll receive and how much money they’ll give to Grubhub for each order.
For example, restaurants can choose how much commission they’ll give to Grubhub depending on how much exposure they’d like to receive on the platform. The more commission restaurants fork over, the higher they’ll be ranked on Grubhub’s search results and the more marketing they’ll receive.
Also, Grubhub does more than delivery. Restaurants can also opt to be listed on the Grubhub online platform, but use their own drivers to deliver the orders.
To give you an idea, Grubhub charges restaurants the following commission fees:
- Prepaid Order Commission Rate: This depends on the commission level restaurants choose (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.
Are the Costs Worth It?
At the end of the day, it’s up to you to decide if the juice is worth the squeeze. Whether you’re a customer, delivery driver, or restaurant owner, there will be costs that you’ll need to cover when using Grubhub.
If you’re a hungry customer, a delivery driver that could use some extra cash, or a restaurant owner that is looking for extra revenue streams, we think Grubhub is worth it.
But again, that’s up to you to make the call!