DoorDash & GrubHub charge restaurants an advertising fee and then use that money to pay Google to run advertisements that use our restaurant’s brand name to divert customers away from our website to our competitors on their platform.
My name is Travis Stoliker and I’m a small restaurant owner in Lansing Michigan. Owning two small BBQ restaurants in a small town is an incredibly difficult business. Everyone knows that owning a restaurant, in general, is tough. But it gets even harder when two of the largest companies in the world conspire against you to steal your customers. This might seem like hyperbole. But give me a moment to let me explain.
Most consumers don’t realize this, but when you order delivery from one of the large delivery partners like GrubHub or DoorDash - not only do you pay a delivery fee, service fee, and a generous tip to the driver. But we restaurant owners also pay. The delivery companies don’t like us to talk about the fee’s but it has been well reported elsewhere that these fees can range from 15% to 35% of your entire order. So if you order $10 of food from us. The delivery company usually takes about $3 of it and only gives the restaurant $7. For an industry with notoriously slim profit margins, that percentage is painful. That does _not_ include all of the delivery fees, taxes, service fees, and tips that you might pay on top of that.
The justification that the delivery companies give to the restaurant for why we would agree to something this crazy is that they call it an “advertising fee”. How they justify this huge cost is by saying that their platforms are so large and there are so many people searching for food on their platforms, that our restaurants benefit because the delivery platforms are bringing us new customers that have never heard of our restaurants. And of course, that’s what us Restaurant owners are always looking for - New Customers.
That all sounds good if it were the case, but unfortunately, it is not the case at all. DoorDash & GrubHub’s relationship with Google is a perfect example.
Our small BBQ Restaurants (Saddleback BBQ) are located in the small town of Lansing Michigan. If a person in Lansing goes onto Google search to look for directions to our location and types into the Google search bar (or their browser) ‘Saddleback BBQ Lansing’. DoorDash & Google conspire to take that customer and direct them to DoorDash. You’ll notice a few things about this.
- The “Advertisement” is much larger than our own “order” button where someone can order directly from our website or get directions to our location.
- DoorDash uses our brand name “Saddleback BBQ” right in the advertisement.
- Possibly the most maddening thing is that if a customer clicks on the link, it does NOT take them to a webpage to order from Saddleback BBQ. It takes the user to a general page to order BBQ from anyone that serves BBQ. At the top of the list? Applebees.
So to summarize, DoorDash pays Google an advertising fee to steal customers that are searching for our restaurant name “Saddleback BBQ” and they are redirecting them to their own page. From there a customer can purchase from any BBQ restaurant in Lansing or if the customer chooses to order from us we must pay DoorDash a fee for bringing us that customer.
DoorDash and Google are actively conspiring to steal customers from local small businesses that are restaurants. They are not doing this by advertising to people that search for general terms like “BBQ in Lansing” - They are doing this by stealing people that are searching specifically for our business name: “Saddleback BBQ”. They are all getting paid.
This isn’t just limited to DoorDash. GrubHub does the same thing. If you search for “Saddleback BBQ Hours” in Lansing you will get an advertisement from GrubHub. If you search for “Saddleback BBQ Online Ordering”, once again, you will get an advertisement from GrubHub.
Now, of course, we are all private businesses and this is primarily an issue of contracts. We agreed to pay them a fee for orders placed on their platform because of the supposed value that they are “advertising” us to new-customers. I want to be very clear, the problem is NOT that we are paying them for their services. The problem is that they are actively using our brand name to advertise to customers that are already looking for us. They are redirecting those customers to their platform where they can purchase from a competitor or they can charge us a fee to provide food to that same customer. Whereas the customer could have just gone to our website and ordered directly from our online ordering store and we would not be charged a commission to GrubHub or DoorDash.
Being that we are partners of DoorDash and GrubHub, I have personally reached out to them multiple times. I’ve spent hours on the phone with each of them to get them to stop this practice. For a while, they stop, but then, they start up again. Which they both just did recently. Our only recourse is to immediately terminate our contract with GrubHub and DoorDash, which we are considering doing.
The problem is that if we cancel, does that mean they will actually stop stealing customers that are looking for our restaurant and directing them to our competitors? We don’t know. I doubt it, but we will find out.
DoorDash and GrubHub have a long history of screwing their partners. Grubhub has used thousands of fake websites to upcharge commission fees from real businesses. They also list phone numbers that don’t belong to the actual business. DoorDash has been accused of stealing the tips of its drivers.