Here’s why people are upset with the Big 3 and what your Restaurant Delivery Service Companies can do about it.
It’s hard to believe that the three biggest restaurant delivery companies have been around for less than ten years. DoorDash, GrubHub, and UberEATS have entirely transformed how Americans eat and interact with restaurants.
But none of these companies have escaped media scrutiny. The Big 3 have all faced accusations of shady practices, from tip skimming to unauthorized restaurant listings. It can be hard to keep track of everything that’s happened.
At DataDreamers, we are firm believers in transparency and open communication. This is why we’ve put a lot of energy into our restaurant delivery software’s communications dashboard. We also list our pricing right on our website rather than burying it behind a sales funnel. (In case you’re curious: 25¢ per order. $250 one-time setup fee. $99 monthly fee. That’s it.)
So, in the name of transparency, we pulled together a timeline of the Big 3: DoorDash, GrubHub, and UberEATS. Our timeline covers the origins of the Big 3 and the major grievances that have been leveled against them.
The earliest origins of large-scale restaurant delivery apps: 2004
Mike Evans and Matt Maloney invented GrubHub. GrubHub started out as just a way to find new restaurants in your neighborhood. The company didn’t start offering delivery until later.
The restaurant delivery service companies app boom: 2013-2015
Tony Xu, Stanley Tang, Andy Fang and Evan Moore started a food delivery service called Palo Alto Delivery. Palo Alto Delivery scored a big chunk of venture capital six months later and became DoorDash.
GrubHub and Seamless announced a merger.
GrubHub became a public company via initial public offering.
GrubHub started offering its own delivery service. Up until this point, restaurants listed on GrubHub were responsible for their own delivery. The new service gave restaurants the option to outsource their delivery to GrubHub instead.
Uber announced the launch of food delivery service UberFRESH.
UberFRESH became UberEATS. Uber also released a separate app for UberEATS, to differentiate between its food delivery service and its rideshare service.
Continued growth of restaurant delivery service companies
DoorDash surpassed GrubHub as the largest food delivery provider in the United States.
GrubHub was accused of registering a bunch of web domains for restaurants without their permission—over 23,000, in fact. However, GrubHub claimed that the restaurants had indeed agreed to the new domains as an advertising benefit.
DoorDash received widespread media criticism for its tipping policy. The company used tips to cover the driver’s guaranteed minimum wage rather than giving them to drivers. New York Times reporter Andy Newman shared this clear example in his exposé:
DoorDash offers a guaranteed minimum for each job. For my first order, the guarantee was $6.85 and the customer, a woman in Boerum Hill who answered the door in a colorful bathrobe, tipped $3 via the app. But I still received only $6.85.
Here’s how it works: If the woman in the bathrobe had tipped zero, DoorDash would have paid me the whole $6.85. Because she tipped $3, DoorDash kicked in only $3.85. She was saving DoorDash $3, not tipping me.
DoorDash admitted to a massive data breach. As a result, nearly 5 million restaurants, delivery drivers, and customers had their data stolen.
DoorDash received another round of media criticism for lying about driver tips. DoorDash claimed to have overhauled its tipping system, but drivers’ pay-outs were still being manipulated. According to one study, drivers were only making about $1.45 per hour after gas, taxes, and time expenditure.
A food truck owner in Chicago posted his GrubHub earnings statement online, which sent ripples across the internet. The truck only netted $376.54 on $1042.63 worth of orders according to the post.
New Yorkers sued UberEATS, DoorDash, GrubHub, and Postmates. All four companies were accused of the same thing. Basically, restaurants could only be listed on the apps if they charged the exact same price for delivery and dine-in. In other words, restaurants that charged more for delivery to cover delivery costs weren’t being listed on the apps.
GrubHub was hit with a class-action lawsuit from a group of restaurants. According to the restaurants, GrubHub was listing them on the app without their permission. Customers were placing delivery orders and getting upset with the restaurants when they never arrived. But the restaurants never knew the orders were being placed because they had no agreements in place with GrubHub. GrubHub was also accused of listing old menus and items that were no longer available. This caused additional backlash for restaurants: Customers were leaving angry reviews and damaging the restaurants’ reputations.
DoorDash became a public company via initial public offering.
Shortly after GrubHub was criticized for listing restaurants without their permission, DoorDash was accused of doing the same thing. Lona’s Lil Eats, a restaurant in St. Louis, shared that DoorDash had listed them on the app without their permission. Anyone who tried to order from Lona’s was told that the restaurant was out of delivery range. The app would then suggest an alternative restaurant.
UberEATS achieved profitability for the first time since its inception in 2015. However, many questioned the sustainability of its business model.
Every time one of these stories goes viral, the entire delivery industry catches heat for it. As a result, some customers and restaurants have sworn off delivery entirely in protest of these practices.
This is a real shame because restaurant delivery is here to stay. And there’s no denying the convenience, value, and joy it can bring to customers. So what’s the solution?
DataDreamers is proud to offer an alternative to the Big 3: Independent, reliable, top-quality food delivery software. RDSs use DataDreamers to give restaurants an alternative to working with the Big 3, so they too can protect their business and serve their customers better. We’re committed to transparent pricing and an excellent user interface, so regional and local RDSs can provide excellent service and maintain a sustainable business.