Grubhub’s free lunch promo creates a literal ‘Hell’s Kitchen’ for NYC restaurants – TechCrunch

Grubhub offered Free lunch yesterday to everyone in New York City. What could go wrong?

Between 11 a.m. and 2 p.m., New Yorkers could get a $15 discount on lunch with a Grubhub promo code. Of course, the restaurants were inundated with an unexpected spate of orders. Corresponding buzz feed, an employee at a Harlem Mexican restaurant, used Uber to deliver orders herself because the in-house delivery driver was overwhelmed. An employee at Greenberg’s Bagels in Brooklyn also told Buzzfeed that they receive 50 orders in an hour, while they typically receive about 10 orders from Grubhub per day.

Across New York City, Grubhub said it had received about 6,000 orders per minute. Within an hour, some users were tweeting that the promo code stopped working or that restaurants had marked themselves closed to stop receiving orders. Overall, many orders were delayed and/or cancelled, but restaurant workers and delivery drivers were hardest hit, struggling to fulfill orders at an impossible speed.

Grubhub said it modeled this promotion after a previous one, but this time, customers used the promo code six times more, leading to higher-than-expected demand.

“To help businesses prepare for yesterday’s action, we notified all restaurants in our network in advance, which included multiple forms of communication via email and in-platform,” Grubhub said in a statement to TechCrunch. “Even with this preparation, no one could anticipate demand, which unfortunately weighed on some restaurants. We will no doubt glean many lessons from this that can help us optimize and mitigate issues in the future.”

Apparently, many restaurant workers didn’t get the memo — and even then, taking proactive measures like adding an extra driver to a shift wouldn’t have prepared a restaurant to handle such a dramatic surge in demand.

This isn’t the first time a Grubhub promotion has accidentally left restaurants behind.

In March, DC Attorney General Karl Racine sued Grubhub for “misleading district residents and exploiting local restaurants to increase their profits”. One incident the lawsuit referred to was Grubhub’s early pandemic era “supper for support‘ action that has been discontinued. Launched in late March 2020, Grubhub offered restaurants the option to offer a $10 coupon for orders over $30, but the restaurant had to foot the bill for that free meal. On the consumer side, Grubhub encouraged customers to “save while supporting restaurants [they] Love,” though her ads actually put more strain on restaurants by pressuring them to cut profit margins.

For yesterday’s promotion, Grubhub paid for the customers’ $15 coupon, not the restaurants. The company says it complies 400,000 lunch orderswhich at $15 a piece would make the company $6,000,000 for what was largely a mistake.

Grubhub has also been under investigation for misleading advertising and has faced legal troubles. List restaurants in their app without the consent of the entrepreneur. That means a consumer could place a Grubhub order for a restaurant that doesn’t even know they’re on Grubhub, meaning the company could pay a fee to Grubhub without knowing it. Or, once a Grubhub courier arrives, the restaurant might not even know they should be preparing that takeout order.

Despite a spike in delivery orders during the pandemic, grocery delivery apps are still enduring fought Make profit. But customer acquisition drives like yesterday’s are unlikely to encourage customers to keep coming back to Grubhub.

Grubhub’s free lunch promo creates a literal ‘Hell’s Kitchen’ for NYC restaurants – TechCrunch Source link Grubhub’s free lunch promo creates a literal ‘Hell’s Kitchen’ for NYC restaurants – TechCrunch

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