Grubhub reports surge in profits as restaurants struggle

Taylor Rock

American restaurants are projected to lose $240 billion this year. Instead of sitting down and dining, people are staying in and ordering delivery or takeout. While restaurants themselves are struggling, according to a new earnings report from Grubhub, the third-party delivery service is thriving and has taken record fees from restaurants during the pandemic.

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On May 6, Grubhub announced its financial results for the first quarter ending March 31, 2020. The company reported revenues of $363 million — a 12% increase over the same time last year. Founder and CEO Matt Maloney says the company plans to use nearly all of its profits to generate as many additional orders for restaurants as possible.

“We hope that the darkest days are behind our restaurant partners and they can start focusing on the recovery,” he said in a press release.

Grubhub's profits don't come without controversy. Using Grubhub and other delivery platforms makes the ordering process easy for customers, but restaurants are left with hefty fees. Take for example this viral tweet from April 30, which shows a screenshot from Chicago Pizza Boss. The payout total was $1,042.63, but after commission, delivery commission, processing fee, promotions and order adjustments, the restaurant received just $376.54.

Some cities including Seattle and San Francisco have mandated emergency caps on delivery service fees, but Grubhub has not reduced fees in other markets. At the epicenter of the outbreak in New York City, lawmakers have proposed capping third-party fees to 10% and prohibiting all other fees including advertising and processing fees.

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