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Grubhub is suspending commission fees for independent restaurants

The GrubHub app Harrer/Bloomberg via Getty Images

Andrew Harrer | Bloomberg | Getty Images

As the restaurant industry braces for the impact of the coronavirus outbreak, Grubhub is temporarily suspending commission fees for impacted independent restaurants of up to $100 million. 

As public health officials recommend “social distancing” to stop the spread of the virus, restaurants are among the businesses expected to see their sales decline. Grubhub cited expectations that restaurant traffic could plunge by as much as 75% over the next few weeks.

“Independent restaurants are the lifeblood of our cities and feed our communities,” Grubhub CEO Matt Maloney said in a statement. “They have been amazing long-term partners for us, and we wanted to help them in their time of need.”

The decision to suspend commission fees was made in collaboration with mayors of Chicago, San Francisco, Boston, Portland, Oregon and New York.

Restaurants can pay commission fees as high as 30% on orders delivered by third-party aggregators like Grubhub. Even before the pandemic, restaurateurs were complaining about the pressure the fees put on their profits, leading the New York City Council to propose capping fees at 10%. 

Grubhub does not publicly disclose what percent of its revenue comes from the commission fees. In 2019, the company’s revenue was $1.3 billion. In addition to commission fees from restaurants, Grubhub also receives revenue from delivery fees paid by consumers and other fees paid by restaurants, like for marketing.

Shares of Grubhub, which has a market value of $3.42 billion, were up nearly 5% on Friday. The stock has fallen 23% so far in 2020.

Rival Postmates said Tuesday it would waive commission fees for small businesses in San Francisco that sign up for a relief pilot program. 

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