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What To Know About GrubHub's New 'Common Sense' Fee Solution

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What To Know About GrubHub's New 'Common Sense' Fee Solution

Food delivery platform GrubHub Inc (NYSE: GRUB) said Thursday in a letter to New York City council members it will stop charging restaurants for phone calls made through its app that don't result in an order.

GrubHub's 'Common Sense' Solution

GrubHub previously charged restaurants a commission for all phone calls that originated through its ordering app. GrubHub even billed restaurants if a customer called to merely ask a question about a menu option or to make reservations for in-house dining.

But in its Thursday letter to NYC lawmakers, GrubHub said it will introduce what it calls a "common sense" approach, Nation's Restaurant News reported Thursday. Customers who phone a restaurant will need to press No. 1 on their phone to place an order or press No. 2 for other inquiries.

GrubHub's 'Shocking' Response Time

Andrew Rigie, executive director of the New York City Hospitality Alliance, told Benzinga in a statement that it is "shocking" so much time and pressure was needed for GrubHub to make changes. 

Rigie, who heads a trade association of more than 2,000 NYC restaurants, said GrubHub's "greed is in the open." The question remains of whether GrubHub "pay back all of the money they took in the first place," he said. 

GrubHub's 'Insufficient' Response

Mark Gjonaj, chair of the NYC small business committee and a city council membher, said in a statement obtained by NRN that GrubHub 's changes are "insufficient."

There is no indication that GrubHub will "make whole" the thousands of restaurants that paid commissions for phone calls that didn't result in an order, he said. 

These are hard-earned dollars that could mean the difference between a restaurant staying open or having to close its doors, Gjonaj said, adding that "this is money that GrubHub was never entitled to in the first place."

The stock was trading down 8.02% at $51.27 at the time of publication. 

Related Links:

GrubHub Says There Are No Plans To Sell Itself

GrubHub Still Has Some Work To Do, Analyst Says After Deep Dive Into Food Delivery Business

Photo courtesy of GrubHub. 

 

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