Grubhub’s business model is built on providing convenience for its customers by allowing them to request food delivery from their favorite restaurants.
However, you might be worried that this convenience comes at a cost, i.e. Grubhub marking up prices. Well, if you’d like to learn the answer to this, keep reading to see what I discovered!
Does Grubhub Markup Prices In 2023?
Grubhub doesn’t mark up prices directly because the restaurants are the ones that set the prices in 2023. However, when Grubhub increases its cut of what the restaurants earn, this results in the prices going up and the costs being transferred to the customers. In most cases, the prices on Grubhub are significantly higher than they are at the restaurant.
To learn all you need to know about price markup on Grubhub, including why this is done, how the fees affect it, responses to it, and more, read on!
How Does Grubhub Pricing Work?
Grubhub pricing is determined in large part by how much the company’s share is from what the restaurant makes.
Because restaurants determine the prices of the menu items and delivery, they have to account for how much they need to charge so they can make a profit after Grubhub takes its cut.
If the percentage Grubhub takes, including marketing, processing, etc. is high, the pricing on the customer’s side will reflect this.
As a result, Grubhub menu prices are often more expensive than in-store.
Why Did Grubhub Charge Me More Than the Advertised Price?
Grubhub charges more than the advertised price because, on top of your actual food, there are other fees like service charges and delivery fees.
However, Grubhub also says that sometimes there are changes that occur right after you place your order, so you might notice additional charges if you look through the activity on your card.
Why Are There So Many Fees on Grubhub?
Grubhub has many fees because it needs other ways to make money that it has more control over since the company has left the delivery and food prices to the restaurants.
Grubhub and other services like it have items like service charges, marketing, and processing fees that they attach to the prices for the product itself and delivery.
Why Does Grubhub Charge a Service Fee?
Grubhub charges a service fee in order to get money to keep its operations running by covering costs such as payment processing fees.
As stated above, this is one of the company’s most important sources of income so it’s charged even when you have a premium subscription with Grubhub+ that removes most delivery fees.
Is Grubhub a Ripoff?
Whether or not Grubhub is a ripoff depends on how you look at the service and your thoughts on the way the company runs operations.
Some people would take the fact that the prices on Grubhub are often higher than they are at the restaurant as all the proof they need to label it a ripoff, but that’s standard for all similar services.
Grubhub has had to deal with different lawsuits over the years, most of which focused on what was defined as deceptive business practices.
Most recently, the attorney general of Washington D.C. filed a lawsuit against Grubhub for “misleading” customers and “taking advantage of” the restaurants it partners with.
As per the company’s announcement, Grubhub uses bait-and-switch tactics and hidden fees to boost income from its users.
According to this suit, Grubhub is accused of having done the following:
- Advertising the Grubhub+ subscription program as providing free delivery but still charging service fees
- Previously running a program that offered $10 off for orders over $30, but hid the fact that this discount was going to be footed by the restaurant in the fine print
- Listing restaurants that didn’t register with the service
- Listing phone numbers for restaurants that actually lead to Grubhub instead of the restaurants themselves in a bid to prevent users from going around the service
- Creating websites for partner restaurants without their permission
In 2020, news outlets like Vice reported on the above-mentioned practice of Grubhub generating and listing phone numbers that they said were for restaurants without their permission.
If a user noticed that the prices were high on the platform and decided to contact the restaurant directly, it wouldn’t work because Grubhub would still charge the restaurant.
Grubhub doesn’t directly mark up prices because these, both for the food and delivery, are set by the restaurants that partner with it. However, Grubhub influences these prices by how high or low the company sets its cut of the purchase, including processing and advertising fees.
For this reason, the prices shown when you’re on Grubhub are often higher than they are if you bought the same menu items from the restaurant.