As restaurants struggle with business as more Americans eat at home because of the COVID-19 outbreak, delivery service Grubhub announced Friday it would suspend collecting up to $100 million in commissions from independent restaurants across the country.
Restaurants are already feeling the heat as sales start to decline as more Americans take health officials' advice to “socially distance” themselves from others to halt the spread of the novel coronavirus, which causes COVID-19.
Restaurants on third-party delivery services like Grubhub, the parent of food-delivery app Seamless, can pay up to 30 percent in commission fees making it difficult for some mom and pop owned shops to make a profit even without the coronavirus pandemic plaguing sales. Now, with fewer people ordering food, that commission prices cut weigh even more heavily on a restaurant’s bottom line.
Grubhub’s pledge to temporarily stop collecting commission comes days after food delivery rival Postmates said it would waive commission fees on small businesses in San Francisco when they sign up.
Postmates and a number of other food delivery companies have started offering customers the option to have their food left at their doorstep so they don’t have to be in contact with another person. Grocery app Instacart added a “Leave At My Door” delivery option, and the company said last week it noticed a surged in people utilizing it.
The flu-like disease caused by the coronavirus has led to the deaths of more than 1,832 people in the United States.
The ongoing fear surrounding the spread of COVID-19 has affected nearly every industry, which is why big companies like Grubhub are doing their part to help smaller businesses.
“Independent restaurants are the lifeblood of our cities and feed our communities. They have been amazing long-term partners for us, and we wanted to help them in their time of need," Matt Maloney, Grubhub Founder and chief executive officer said in a statement, adding: "Our business is their business, so this was an easy decision for us to make,”
“Independent restaurants are the lifeblood of our cities and feed our communities."
Grubhub faced backlash earlier this month for charging restaurants for orders that were never made. And last month, a number of restaurants complained that they had not yet received their money back for the unwarranted fees.