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Grubhub offered free lunch to everyone in New York City yesterday. What could go wrong?
Between 11 a.m. and 2 p.m., New Yorkers could use a Grubhub promo code to get a $15 discount on lunch. Naturally, restaurants got flooded with an unexpected deluge of orders. According to Buzzfeed, a worker at a Mexican restaurant in Harlem hand-delivered orders herself via Uber, since their in-house delivery driver was too overloaded. An employee at Greenberg’s Bagels in Brooklyn also told Buzzfeed that they received 50 orders in an hour, whereas they typically receive about 10 orders from Grubhub per day.
Across New York City, Grubhub said that it received about 6,000 orders per minute. Within an hour, some users tweeted that the promo code was no longer working, or that restaurants had marked themselves closed to avoid receiving any more orders. All in all, many orders got delayed and/or cancelled, but restaurant workers and delivery drivers were most adversely impacted, struggling to fulfill orders at an impossible rate.
Grubhub said that it modeled this promotion after a previous one, but this time, customers used the promo code six times more, causing unexpectedly high demand.
“To help businesses prepare for yesterday’s promotion, we gave advance notice to all restaurants in our network, which included multiple forms of communications across email and in-platform,” Grubhub said in a statement to TechCrunch. “Even with that preparation, no one could anticipate the level of demand and unfortunately that caused strain on some restaurants. We’ll undoubtedly have a lot of learnings from this that can help us optimize and mitigate issues in the future.”
Evidently, many restaurant workers didn’t get the memo — and even so, taking proactive measures like adding an extra driver to a shift wouldn’t have prepared a restaurant to meet such a dramatic surge in demand.
This is not the first time that a Grubhub promotion inadvertently served restaurants the short end of the stick.
In March, D.C. Attorney General Karl Racine sued Grubhub for “misleading District residents and taking advantage of local restaurants to boost its own profits.” One incident the lawsuit referenced was Grubhub’s early-pandemic-era “Supper for Support” promotion, which was discontinued. Launched in late March 2020, Grubhub offered restaurants the opportunity to offer a $10 coupon on orders over $30, but the restaurant had to foot the bill for that free food. On the consumer end, Grubhub encouraged customers to “save while supporting the restaurants [they] love,” even though their promotion actually put more strain on restaurants by pressuring them to lower profit margins.
For yesterday’s promotion, Grubhub paid for customers’ $15 coupon, not the restaurants. The company says it fulfilled 400,000 lunch orders, which at $15 a pop, would put the company out $6,000,000 for what was largely a screw up.
Grubhub has also faced scrutiny and legal troubles for false advertising, listing restaurants on their app without the business’ consent. That means that a consumer might place a Grubhub order for a restaurant that doesn’t know they’re even on Grubhub, meaning that the business could pay a fee to Grubhub without knowing it. Or, once a Grubhub courier arrives, the restaurant might not even know that they were expected to prepare that takeout order.
Despite an uptick in delivery orders during the pandemic, food delivery apps have still struggled to turn a profit. But customer acquisition promotions like yesterday’s likely won’t encourage customers to keep coming back to Grubhub.