The corporate entity that is GrubHub/Seamless is raking in big cash from restaurants for better search placement, with some paying a more than 30 percent commission on orders for upgrades, according to a new report from Tribeca Citizen. It's no secret that restaurants end up paying a lot of money to be on the site — one restaurant in Greenpoint recently told Eater that GrubHub commission costs three times more than his rent — but the Tribeca Citizen spoke with 15 anonymous restaurateurs who said that the system is deep and unfriendly to restaurants, all without telling users why certain restaurants pop up first.
Restaurants can choose how much commission they pay Seamless, starting at 12.5 percent, and the more commission paid, the better placement the restaurant gets, Tribeca Citizen reports. Placement makes a dramatic difference, too. One operator claims that with a 15 percent commission, customers said they struggled to find the restaurant on Seamless. But once they went up to a 30 percent commission, the restaurant started getting ten times more orders, even though they still didn't show up on the first page of search results. Still, the restaurant told Tribeca Citizen it only broke even on delivery due to the higher commission and stayed on for the marketing.
Despite the cost, restaurants feel they need to be on Seamless — a part of GrubHub, which also owns MenuPages and AllMenus — in order to get delivery business at all. "If I stop using them, tomorrow I close the door," one restaurateur told Tribeca Citizen. Including fees, another restaurant was sending the delivery company an average of $15,000 a month — all while using technology that regularly malfunctions.
Seamless writes in a statement to Eater that several of the points in the Tribeca Citizen piece are not true, including that the marketing aspect of being listed on the site is negligible. "We have a network of more than 6.7 million diners," a spokeswoman writes. "That is a lot of exposure and opportunity for restaurant owners." She adds in a statement:
GrubHub's unique scale allows us to maximize efficiency and bring substantial demand to our restaurant partners by connecting them with local customers. It also enables us to positively impact revenue growth, order volume and efficiency for the restaurants on our platform. In 2015, GrubHub drove 2.4 billion dollars in sales for our local restaurant partners.
The company also notes that a restaurant sending $15,000 to the company per month could be making $100,000 in sales every month just from diners using Seamless, if it's on the lower end of the commission scale at 15 percent. "That's a lot of revenue for a restaurant," the spokeswoman writes.
Still, Tribeca Citizen is recommending that if you want to order delivery to call the restaurant directly, particularly if you regularly order from it. "At the end of the day, if Seamless is used by one person more than four times for the same restaurant," one restaurateur says, "it just becomes a money-sucking leech."