Something Wicked This Way Yelps

Long excerpt, but you need to read the step-by-step opening to this Vice piece by Adrianne Jeffries who breaks down exactly how the phone numbers and click apps are being changed from the business’ numbers to third party routings. Hint: It means they get to charge the restaurants more. Lots more.

Here’s the end result:

Andrew Martino, owner of the delivery and takeout-only restaurant Ghost Truck, only learned about the phone commissions in July when he was going over his books and realized he was off by a significant amount of money.

“I couldn’t figure out what I was missing,” he said.

He signed into his private Grubhub page where he noticed a few transactions with just a fee and no order total.

“There’s a button where you could hit play and so I was like, what is this?” he said. “I hit play, and the first call was me on the phone, which freaked me out because I didn’t know I was being recorded.” The call was a customer who had his restaurant confused with another restaurant. It took four minutes to figure this out before the customer hung up without placing an order. “I got charged almost $8 for that phone call.”

I reviewed some of the recordings for Ghost Truck Kitchen and found multiple false positives, where Grubhub charged the restaurant between $7.80 and $7.92 per call for informational phone calls that did not result in an order.

Most recordings beeped out identifying information, but one recording included an address and full name that were not censored.

Restaurants are becoming increasingly vocal about the financial pressures they feel from high fees on online ordering apps. New York City council member Mark Gjonaj, head of the Committee on Small Business, held a hearing in June where restaurant owners testified beside representatives from Grubhub and UberEats.

Grubhub representatives said that it is only driving incremental orders, meaning they are orders that come in on top of whatever business the restaurant was already doing. They also said that Grubhub takes professional photos, increases average order sizes, and gives businesses data-driven advice.

“There is a restaurant on the Upper East Side that serves sushi. We worked with them and we said that there’s a trend for poke bowls. We suggested that they start adding some of these items to their menu,” Grubhub senior vice president Kevin Kearns said at the hearing. “They did this and within one month, they doubled their orders, and within three months they 7x’ed their orders to 1,600 orders a month. This is a small business that went all the way up to 1,600 orders a month, and they actually changed the name of the restaurant to put poke in their name because it works so well.”

Afterward, Gjonaj asked the state Attorney General to investigate Grubhub for antitrust violations and Senator Chuck Schumer threatened to recommend that the Federal Trade Commission investigate Grubhub if the company did not refund restaurants for erroneous fees.

I asked Grubhub if there was any movement to revisit the way it handles referrals based on the backlash to the news reports and in the City Council hearing. “We have never abused the trust of our restaurant partners or built our business through trickery and fraud,” Lewis wrote in an email. “Through Seamless”—which Grubhub merged with in 2013—“we have supported restaurants in NYC for over 20 years, driven billions of dollars in food sales for them, managed millions of care issues on their behalf and institutionalized takeout as a fundamental core of eating in New York.”

Grubhub did make one change in response to public pressure. It extended the window in which restaurants can dispute erroneous charges from 60 days to 120 days, the Post reported.

Martino, the owner of Ghost Truck Kitchen, complained to Grubhub about his erroneous phone charges. The company agreed to stop charging him for phone commissions unless a call was over 800 seconds, “which is great,” he said, but “also makes you think they know they’re doing something wrong.”