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Restaurant Owners: are you on GrubHub or Eat24? What's your experience been like?

Testament

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Hey guys,

My mentor's parents run an Indian restaurant that's doing pretty well at the moment, but he wants to take them into the digital age and get them signed up with a service like Eat24 or Grubhub. He wanted me to look into which one would be the better deal, but so far it seems like both of these places are charging insanely high commissions for each sale made on their sites. I was wondering if anyone here who owns a restaurant business has had experience with either of these companies, and if you'd be able to tell me what you think of them.

So far, I've been reading nothing but bad reviews from restaurant owners about Grubhub. I guess they start you out at a 10% commission for each sale they get you, then after you've raised your sales to a certain amount a month, they jack you up to 15% and are pretty rude about it if you try and call them on the massive increase.

For eat24, they charge a similar amount - the listed price on their site is 12.5% of each order. Unfortunately, I haven't actually been able to find any feedback about them from restaurant owners anywhere, though I have to say I really heavily dislike their marketing - very heavy tone of snark on their blog. I feel like I'm reading a food-equivalent of Jezebel.com as I go over it. :meh:

So yeah, if anyone has any experience with either of these companies, I'd love to get your point of view on whether or not you've felt like they were a good service to sign up with for your restaurant. Has it been a headache to deal with them? Has the large commission (combined with the 3% paypal transaction fee on top of that) been worth it for you?

Thanks for the read! :)
 

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Longlong

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Not a rest. owner but i worked closely with one for a few years.

We dropped grubhub after awhile, maybe its location dependent but not a lot of people ordered from grubhub. For example compared to seamless, it was 10 on grubhub vs 100+ on Seamless per day.

Def use Seamless if its available. Even though they take a lot of commision, you cant afford to exclude their users.
 

johnp

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My mentor's parents run an Indian restaurant that's doing pretty well at the moment, but he wants to take them into the digital age and get them signed up with a service like Eat24 or Grubhub. He wanted me to look into which one would be the better deal, but so far it seems like both of these places are charging insanely high commissions for each sale

I work with a lot of restaurants. Most of the restaurants that I work with do not use Grubhub, but they don't do any online ordering or delivery. I listened to an interview with the founders of Grubhub and they stated that some restaurants can make up to 10k per month. I don't know what the real average is though.

So far, I've been reading nothing but bad reviews from restaurant owners about Grubhub. I guess they start you out at a 10% commission for each sale they get you, then after you've raised your sales to a certain amount a month, they jack you up to 15% and are pretty rude about it if you try and call them on the massive increase.

My feeling is that it's worth it if Grubhub has the potential to drive more traffic to the restaurant that the owners would not otherwise be able to get themselves. There is always a price to pay to acquire customers. Although 10-15% does seem like a lot.

Also, tell them to think about ways to use the 'digital age' to bring current customers back into the restaurant. They should be looking to increase the lifetime value per customer. If they can get the same customers back in the door 3x to 5x per month instead of 1x to 2x per month then they can easily make an extra 100k per year (depending on their CPA's and margins). Feel free to private message me if you need any ideas about how to do that.
 
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Testament

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Thanks for your advice, guys! And cheers for the offer @johnp , I'm sure I'll take you up on it and send a message your way soon. :)

Also as it turns out, I think it was around this time last year GrubHub and Seamless merged into one company. I think they chose to stick with just GrubHub as a name though.

I've been trying to delve as deeply into this as I could today, and I found a few blogs/comment sections populated by restaurant owners. Honestly, I'm having a hard time trying to decide if the pros outweigh the cons for signing up with one of these services. Especially when a restaurant owner could probably spend a fraction of the money just hiring someone out to make a website for them and start aggressively marketing them online. Both places charge absolutely absurd commissions on each meal sold.

Here's an excerpt of a restaurant owner on the actual commission fees charged by GrubHub/Seamless (they just merged):

"Seamless charges 12 to 18 percent on the entire order (Item + tax + Tip). Here is where they trick you. If you take into account that the tax goes to the government and the tip goes to your employee, the actually fee is more like 18 to 24 percent."

And they also charge a 3% credit card transaction handling fee for anyone who orders via credit card on your site. It seems completely insane to me, it's like your making them a 25% partner in your business. Also been reading a lot of comments about how their customer service is complete s***, and a lot of restaurants will get 1 star reviews from people based on their experience with GrubHub/Seamless' employees.

Here is a GREAT blog post from a restaurant owner on how he got on GrubHub/Seamless and some steps he took to protect himself against their extremely predatory policies - It's the first blog post at the moment, titled "My GrubHub Invoice Makes Me Sick":

http://www.mygrubshop.com/

Great quick read, I highly encourage whoever reads this to take a look at it. Here are some highlights he has:

"Do’s:

-I offer specials on the restaurants ordering platform (using the special offers section, Pockets gives a free item when $20 is spent).

-I offer a loyalty program (using the built in loyalty feature, Pockets gives $5 off for every $100 spent).

-I offer a first time discount (our system can automatically reward 10% off the first time order).

-I put a flyer in each bag telling customers of these deals when they order online from the Pockets website only.

-I offer credit card processing with vaulting (Customers can order without reentering credit card info).

-Once every so often I turn off Grubhub for a couple of weeks. This forces those who love our food to seek out and order from the Pockets website. Once we capture their email information they receive monthly emails that often promote special offers that are only good at the Pockets website.

Don'ts:

-Do not give customers any deals when they order from Grubhub.

-Do not use any of the marketing material they send. Recently we were voted Best Chili and they sent us signage to put in the window. That went directly into the garbage! They just wanted to promote their brand, not mine.

-Do not put their ordering link on your website! I know it is cheap, but for god sakes it is YOUR brand you are trying to build and now you are handing them your customer information.

-Do not let them build another website for you. This only creates competition on the search engines against your website. When customers go to Google and search for your restaurant, they might now find Grubhub’s site and order from there.

-In some cases we have little choice and must use Grubhub. However, we can be smart operators and take steps that help our businesses in the long term. Getting repeat customers to order directly from our websites is possible if we make the effort. If we don’t do this, margins will continue to get squeezed and our businesses will suffer."
 

DarKoren

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Does your parent's resturant make food deliveries? If so, would they be interested in a lead generation model for customers needing food deliveries?
 

johnp

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That's all pretty interesting. I spent a lot of time reading about how Grubhub started since they are sort of in the same industry as me. I never found that information that you just posted. I just learned a lot bout Grubhub haha. It seems like the profit margins are pretty slim for restaurants that use Grubhub. The company is pretty big and they are growing fast so yea, I guess naturally they are going to need to make more money from each order.

I'm pretty sure that when they first started they were only charging a monthly fee.

Also as it turns out, I think it was around this time last year GrubHub and Seamless merged into one company. I think they chose to stick with just GrubHub as a name though.

Yea they merged. Grubhub owns a few sites. If you go down to the bottom of their site then you can find more information about it.

Does your parent's resturant make food deliveries? If so, would they be interested in a lead generation model for customers needing food deliveries?

How is that even possible? You would have to verify and deliver the lead pretty fast. Isn't that essentially what Grubhub is doing?
 

DarKoren

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How is that even possible? You would have to verify and deliver the lead pretty fast. Isn't that essentially what Grubhub is doing?
Well it is happening so of course it's possible (Non-US citizen), I was wondering if something similar is applied in the US.
The business model works differently than Grubhub's: A person that needs a food delivery opens a mobile app, chooses the type of food that he wants to order, then the app finds him a deal on that food type based on his GPS location. The app is displaying details about the deal (Resturant name, phone number etc.) and the person can either order or request a new deal from a new place (max. 3 deals per day).
The company charges per DISPLAY and not per TIMEPERIOD or TRANSACTION and the price is super low. This is not "traditional" lead generation but resturant owners pay for leads, not space.

The point is: From what I've read Grubhub is using a completely different model which can be harmful for resturant owners. I was wondering if you have something like that in the US, if not, you have yourselves an INE.

By the way - Awesome forum, looking forward to be a part of it! Just one question.. How can I P.M someone here?
 

johnp

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Well it is happening so of course it's possible (Non-US citizen), I was wondering if something similar is applied in the US.
The business model works differently than Grubhub's: A person that needs a food delivery opens a mobile app, chooses the type of food that he wants to order, then the app finds him a deal on that food type based on his GPS location. The app is displaying details about the deal (Resturant name, phone number etc.) and the person can either order or request a new deal from a new place (max. 3 deals per day).
The company charges per DISPLAY and not per TIMEPERIOD or TRANSACTION and the price is super low. This is not "traditional" lead generation but resturant owners pay for leads, not space.

I see..sounds interesting. I have never seen anything like that in the US but it might exist here, not sure. If it's working somewhere else then I don't see why it wouldn't work here. The key to figuring that out is really going door to door to restaurants and/or picking up the phone and calling them with a good hook. I guess that would be hard for you if you are not in the US.

But to sort of get back on track with the thread - @Testament , when helping your mentor's parents get into the digital age, look into some mobile solutions, like native apps.
 

DKNJ

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Hmm whenever I saw a grubhub sticker on a restaurant door, I was impressed with the savviness. I had no idea it wasn't all that. I am in the process of possibly getting into the food business. My intended strategy is to make a nice website and SEO it the best possible. I considered grubhub but having second thoughts after reading this. Maybe giving visitors some little incentives for doing a fb and ig check in could help. Would giving visitors incentives for a good rating be a bad idea? Maybe that could make your ratings look less credible. However, if you had a ton of good ratings it could get more people in the door. I know this place that sells platters that does pretty well. They give out those custom hole punch cards that look like business cards that you get at the carwash where every x amount of visits you get yours next one on the house. I also think it would be good to try and achieve awards to put on the doors or entrance. What about groupon or gilt? They don't specifically target food businesses but maybe you can get your bang for your buck through them.
 

jilla82

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I dont know anything about the restaurant biz...but ive ordered food online off of yelps website.
Have you looked into that?
 

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Testament

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Yelp just partnered with Eat24, so I think that's probably what you ordered the food with.

And yeah, I've read nothing but bad things about Groupon - all the complaints about the online restaurant ordering x2. :O

Koren - A lead-gen service is pretty much what Eat24 and GrubHub are, no?
 

tafy

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I don't see why restaurant don't set up their own online ordering service on their own website, there's tonns of apps to make it a reality. Screw giving away15% to these sites.
 

Andy Black

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One of the biggest local searches on Google and Bing is people looking for restaurants. Why not throw up a simple site and paid search campaign and see if they can generate sales that way? Don't bother adding online ordering functionality until volumes justify it... just have menus, opening times, map, contact us form, and phone number.
 

Monica Bell

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I would recommend to save your money and choose an all-in-one solution like smart web. I haven't tried it myself but have a number of friends, restaurant owners, who use this system and are very happy about it. It's a piece of cake to change any price and online ordering is very intuitive. I'll be also switching to Smart Web Restaurant by the end of the year when my Wix contract ends. I've seen a couple of sites using eat24, they all look the same, not attractive at all

[Limks removed by Mod]
 
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biophase

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Isn't the appeal of grub hub the delivery?

If they just want online ordering and carry out they should create their own website.

Are they on Yelp?
 

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