Tech

Grubhub Spent $6 Million Feeding New Yorkers: What Can We Learn From Its Massive Failure?

On May 12, Grubhub announced a city-wide free lunch for NYC on May 17, from 11am to 2pm. If a customer orders any amount above $15, they’ll automatically get $15 off. While this is an enticing offer, it’s not unique—Grubhub, and its rivals, UberEats and Doordash, have previously carried out such promotions with varying success.

However, this promotion was different. Because, right at the promo’s start, both restaurants and delivery personnel were swamped with so many orders that left customers waiting for hours only to get cold food.

So, what went wrong?

According to the New York Post, Grubhub offered a discount for deliveries last May 17.

This is how it went: if a diner ordered less than $15, they’d have to cover everything. But as soon as their order hit $15, they could apply a $15 discount via the FREELUNCH code.

Essentially, Grubhub was giving away free food at $15 per order. This is different from previous promotions, like the one offered in the first week of May, where customers received $20 off for a minimum purchase of $25. Although that promotion offered massive discounts, the customer still had to pay.

And while Grubhub’s FREELUNCH seemed like just another promotion to many restaurant owners, it was a massive opportunity for the NYC population. After all, who doesn’t like free food?

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A Missed Announcement

To tell their restaurant base that they’re launching a massive promotion, Grubhub sent emails.

However, it seems the Free Lunch messaging didn’t have a significant impact. The subject line on two emails said “Get ready for a serious lunch rush” and “The big day is almost here,” and both emails were paired with a simple graphic. There were also allegations that some restaurant owners didn’t receive any emails.

As said earlier, there is no shortage of promotions in the food app delivery industry, so many restaurant owners assumed this was just another discount.

Furthermore, most restaurants in Grubhub are mom-and-pop operations, so the owners themselves handle day-to-day operations. Given the high-stress nature of the restaurant industry, many just don’t have the energy to read and process emails like these.

At 11am on May 17, absolute pandemonium hit the Grubhub app. Buzzfeed News reported that Grubhub was at times receiving 6,000 orders per minute during the promotion. In fact, New Yorkers were so excited about the promotion that a Brooklyn café received 200 orders in its first five minutes.

Axios reported that Grubhub fulfilled over 400,000 orders during the promotion. This sudden influx caught many restaurants unaware. And while most establishments were able to serve their orders, their workers were exhausted from the three-hour rush that hit them like an oncoming train.

Furthermore, food preparation takes time, so if your restaurant suddenly receives 200 orders simultaneously, preparation and delivery times will definitely go through the roof.

One more thing that exacerbated the situation is the lack of delivery drivers. While some restaurants used their in-house delivery service, those with none had no choice but to wait for Grubhub drivers to come and pick up the orders. Unfortunately, despite the increased driver incentives, there still weren’t enough to serve all Grubhub customers.

This led to many frustrated clients who either received cold food, were canceled on, or didn’t receive their orders altogether.

How Grubhub Can Avoid This in the Future

While the damage has been done, there are still some key takeaways that Grubhub and restaurant owners can learn from this disaster.

1. Widespread Restaurant Messaging

Despite their emails, it’s sometimes not enough to remind busy restaurant owners and personnel of their upcoming promos. One way they can do this is to put reminder banners in the Grubhub Restaurant App so that during off-peak times, the restaurant can get notified of any upcoming promotion, even if they don’t check their email.

They should also send text blasts alongside their emails. That way, Grubhub can ensure that their restaurants are familiar with their promo. And if the discount is expected to bring in a lot more customers than usual, they should communicate that with the restaurant as well.

2. Auto-Limit Orders

This feature is another change Grubhub can implement in their restaurant app. It would act similar to a restaurant’s front desk, limiting the number of customers inside a restaurant according to its seating capacity.

Implementing a maximum number of pending and undelivered orders can ensure that the kitchen won’t get overwhelmed. Once the restaurant reaches its maximum capacity, in-app ordering is temporarily put on hold until they clear their orders.

3. Be Ready With More Riders

Both Grubhub and restaurants should prepare more delivery personnel when they expect a massive sale like this. And in case Grubhub can’t accommodate a pending delivery within a set time, they should at least give the restaurant a choice to arrange their own delivery (with the corresponding delivery fees reimbursed to the establishment).

That way, the restaurant can protect its name and deliver its food when its customers expect.

A Learning Experience

While this massive failure has cost Grubhub over $6,000,000, a lot of wasted food, and many hangry New Yorkers, it’s still a learning experience for the foodservice industry.

However, there’s one key thing we shouldn’t forget: never underestimate the demand for free food from hungry people.



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