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How Yelp and Grubhub Executives Could’ve Avoided Their Recent, Massive Screw-Up

By August 8, 2019No Comments

(This post originally appeared on Inc.)

According to a report this week from Vice, online review site Yelp and their partner Grubhub are “screwing over restaurants by quietly replacing their phone numbers” so that they can extort (my word) more fees from their small business listings.

Let’s back up first and explain this. As everyone knows Yelp is the place where we go to look up a business – particularly small merchants and restaurants – so that we can check out what other people are saying about them. Once there – and if enticed – we may decide to visit or even place an order. For many restaurateurs it’s a very important source of new business. So enter Grubhub.

In 2017, Yelp entered into a partnership with Grubhub, the popular delivery service in order to – according to its press release – “connect consumers with the best food ordering options” and “to capitalize on each company’s unique assets and propel online takeout and delivery.”  As part of the agreement, Yelp promised to integrate Grubhub’s online ordering features with the goods and services listed by merchants and restaurateurs on its platform.  How? Well, we’re now finding out.

According to an investigation by Vice’s Adrianne Jeffries, when Yelp visitors want to call the restaurant to place a takeout order, the number provided doesn’t actually go to the restaurant. It goes to Grubhub where the order is placed and then sent to the restaurant. There are two big problems with this.

The first is that the restaurant owners, who maintain their own listings on Yelp, were not aware of this change. It’s kind of like Facebook or Google changing information about your company’s page or listing without your knowledge. But that’s not the biggest issue.

The biggest issue is that when the caller places an order through Grubhub, the restaurant is charged a “referral” fee – which as far as I can tell is anywhere from 15 to 30 percent – from Grubhub (which Yelp, its partner, now shares). Restaurant owners are ticked because previously a customer could call them directly and they had the choice of offering Grubhub or their own internal delivery (at much less cost).

All of this is sneaky, but that’s not all the recent sneakiness from Grubhub.

A report in June from the New Food Economy found that the delivery service was creating tens of thousands of “micro sites” for restaurants and businesses so that when customers found these unauthorized sites online they would order food and the restaurant would be charged a fee from Grubhub. In addition to these micro sites, The Verge reports that Grubhub also owns “multiple restaurant listing properties across the web, including AllMenus, Eat24, Seamless, and MenuPages.  Now some politicians are considering anti-trust investigations.

But there’s something that’s being missed amidst all the yelling screaming. There’s an underlying benefit that Yelp and Grubhub provide to these small businesses: more revenues and arguably less money spent on marketing and delivery costs.

Aren’t both Yelp and Grubhub providing a wider audience and a potentially less expensive services that most small businesses could never achieve on their own? Aren’t they spending a lot of money on marketing, search, web development and infrastructure so that a customer can find a good pizza shop in Queens or an Indian restaurant in Glenwillow and then get their food delivered on time? Aren’t these services then providing a platform for customers to leave positive reviews which can attract more customers and aren’t they collecting data which can be used to bring those customers back through loyalty and other programs?  Doesn’t this mean more opportunities, revenues and cost savings for Yelp and Grubhub’s small business community?

Of course it does. So why am I making this case instead of Yelp and Grubhub? Oh, I know why: their executives screwed-up.  That’s why.

Unfortunately, and in the midst of their money grab, this message was never delivered. Instead we’ve got news articles, opinion columns, tweets and posts accusing Yelp and Grubhub of ripping off small businesses. Good jobs guys, you’ve earned the negative feedback.

That’s because instead of positioning these changes as yet more ways that they’re helping small businesses grow and save costs they’ve conducted a clandestine campaign that gives the now accepted perception that they’re screwing small businesses and stealing their online identities and sneaking in unwanted fees and commissions.

The takeaway? Aggressive, innovative actions to increase your revenues isn’t a bad thing. Not explaining your actions in advance to those most interested and affected is. Stop thinking about the money you’re going to get. Think instead about how you’re going to communicate these actions to others and how they’ll also benefit.

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