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 $15 off lunch. Naturally, restaurants were inundated with an unexpected deluge of orders. According to Buzzfeed, an employee of a Mexican restaurant in Harlem delivered orders via Uber himself, because the delivery driver was too overloaded. An employee at Greenberg’s Bagels in Brooklyn also told Buzzfeed that they received 50 orders per hour, when they normally receive about 10 orders per day from Grubhub.
Across New York City, Grubhub said it was receiving about 6,000 orders per minute. Within an hour, some users tweeted that the promo code had stopped working, or that restaurants had marked themselves as closed to stop receiving orders. Overall, many orders were delayed and/or cancelled, but restaurant workers and delivery drivers were most affected and struggled to fulfill orders at an impossible pace.
Grubhub said it modeled this promotion on 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’ve given all restaurants in our network advance notice, including multiple forms of communication via email and in-platform,” Grubhub said in a statement. TechCrunch. “Even with that preparation, nobody could anticipate the demand and that unfortunately put pressure on some restaurants. We will undoubtedly learn many lessons from this that can help us optimize and reduce problems in the future.”
Apparently, many restaurant workers didn’t get the memo — and yet taking proactive measures, such as adding an extra driver to a shift, wouldn’t have prepared a restaurant to meet such a dramatic increase in demand.
This isn’t the first time a Grubhub promotion has inadvertently left restaurants with the short end of the stick.
In March, DC Attorney General Karl Racine sued Grubhub for “misleading district residents and abusing local restaurants to increase its profits.” One incident the lawsuit refers to was Grubhub’s early pandemic-era “Supper for Support” promotion, which was discontinued. Grubhub, launched in late March 2020, allowed restaurants to offer a $10 coupon for orders over $30, but the restaurant had to foot the bill for that free food. On the consumer side, Grubhub encouraged customers to “save while supporting the restaurants at the same time” [they] love,” although their promotion put more pressure on restaurants by forcing them to cut profit margins.
For yesterday’s promotion, Grubhub paid for the $15 coupon from customers, not the restaurants. The company says it fulfilled 400,000 lunch orders, which at $15 each would earn the company $6,000,000 for what was largely a mistake.
Grubhub has also faced scrutiny and legal issues for false advertising, listing restaurants on their app without the company’s approval. That means a consumer can place a Grubhub order for a restaurant that doesn’t even know it’s on Grubhub, meaning the company could pay a fee to Grubhub without knowing it. Or, once a Grubhub courier arrives, the restaurant may not even know they were expected to prepare that takeout order.
Despite a surge in delivery orders during the pandemic, food delivery apps are still struggling to turn a profit. But customer acquisition promotions like yesterday’s probably won’t encourage customers to keep coming back to Grubhub.