Seamless, the food delivery service that was launched two decades ago in Manhattan, calls itself "the New York's most app in New York." Eating like a real New Yorker, declares a subway ad.
But while delivery giant Grubhub, which owns Seamless, seems to have plenty of love for New York, that feeling can no longer be mutual.
In June, during a four-hour hearing of New York City Council's Small Business Committee, restaurant owners complained about the high commissions charged by Grubhub and other third-party delivery apps. Weeks later, New York Senator Chuck Schumer requested a federal investigation into widespread complaints that Grubhub charges restaurant charges for phone calls that do not actually result in orders. And the service has also faced criticism for its recently discontinued practice of creating web domains for the restaurants on the platform.
In response, Grubhub has launched a website to help restaurants recover their web domains and has promised to let owners listen to the recordings of some phone calls that generated disputed fees. On October 1, the company plans to hold the first in a series of "restaurant roundtables" in New York to let business owners release their concerns.
These steps have not molested the company's critics.
"I would love for Grubhub to do the right thing and do more," said Mark Gjonaj, who heads the city council's small business committee. "If they don't, we will look at serious legislation as we move forward as will make this a much fairer playing field. "
New York is one of Grubhub's top-performing US markets and a pivotal battlefield in the escalating competition for dominance among major food delivery apps. As third-party services – including DoorDash, Uber Eats and Postmates, as well as Grubhub and its seamless brand – become faster and more convenient, they are becoming increasingly popular around the world, fundamentally changing what it means to run a restaurant  And from San Francisco to Mumbai, the owners of small, independent restaurants complain that the ordering orders paid by third-party services have cut in all oath thin profit margins.
The major vendor companies have long argued that apps expose restaurants to new customers, allowing small businesses to leverage a network of tens of millions of users online and leverage the advertising muscle of multi-billion dollar companies. Katie Norris, a Grubhub spokeswoman, said the service runs "step-by-step sales" – bringing in customers who would otherwise be home cooking.
"The incremental turnover and traffic with higher average control more than offset commission rates," she said.
But it has not been the experience of Anil Bathwal, who runs the Kati Roll Company, a New York-based chain that specializes in Indian street food.
Mr. Bathwal did not have a major delivery operation when his restaurant chain signed up for Seamless, and he said the service initially brought him new business. But over the years, third-party supplies have grown to make up as much as 30 percent of his sales, as existing customers – those who used to eat at the restaurant – have begun using Seamless instead. "As time goes on, more of my existing customers are being cannibalized," said Bathwal, who estimates the delivery service has reduced his overall profit by between 2 and 5 percent.
Third-party delivery apps vary in their approaches to calculate commissions, which usually range from 15 to 30 percent. While Uber Eats is charging a fixed rate, Grubhub restaurants are charging higher commissions in exchange for better platform visibility.
This system may change in New York. Gjonaj said the small business committee is considering legislation to regulate commission rates. Last month, the New York State Liquor Authority proposed a policy that could effectively limit commissions charged to liquor license restaurants.
But with Grubhub and other delivery apps gaining popularity with customers, few restaurants can afford to opt out. "Grubhub has such large market shares that to say no, many of them feel they will miss out on a lot of business," said Melissa Autilio Fleischut, president of the New York State Restaurant Association. "There are many concerns, but I don't know of any restaurant that says, & # 39; I don't plan to do that through these apps. & # 39;"
From its founding as an independent company in 1999, Seamless prided itself on maintaining healthy relationships with the restaurants on the platform, working with business owners to develop sales strategies and improve menus, one after three formerly Seamless employees who talked about anonymity to discuss internal business dynamics.
But the company's culture changed after it merged with Grubhub in 2013, employees said, and a less sympathetic approach took hold. Sales executives at Grubhub's Chicago headquarters sometimes called on owners who called in complaints, two of the employees said.
Ms. Norris, the Grubhub spokeswoman, said all employees who yelled at a restaurant owner would be disciplined immediately.
"We depend on the success of our restaurants and work very hard to be the best partner we can be," she said.  Another practice also applied to some seamless employees after the merger and has recently been researched: Grubhub's system for determining whether a phone call made by the app has generated an order. Although most customers place delivery orders by tapping the smartphone screens, Grubhub allows users to call via the app, and Yelp listings often include a Grubhub phone number next to the restaurant's direct number.
In December Tiffin, a chain of Indian restaurants in the Philadelphia area, sued Grubhub, claiming that for at least seven years the company had charged restaurants on the telephone conversation platform that never resulted in orders .
Marco Chirico, who runs Enoteca on Court, an Italian eatery in Brooklyn, said that he recently discovered that over two months Grubhub had charged him hundreds of dollars for phone calls where customers only asked for a menu item or asked about a reservation. He got a refund from Grubhub, he said, but only for phone calls whose recordings he had gone through.
"Now I have to take the time or pay someone extra to go through all the transactions and phone calls to see if they were bookings or reservations," Chirico said. "It can hurt you at the end of the month."
Over the years, Grubhub has publicly acknowledged that it uses an algorithm to determine if a telephone call resulted in an order rather than reviewing the transcript of each call. The company decides whether to charge restaurants based on a number of factors, including the length of the call and whether the customer who did so also placed an order online that day, according to spokeswoman Norris.
"We are constantly refining these systems and processes to ensure we are optimizing for accuracy," she said.
In August, Grubhub announced it would double the time it takes restaurants to make phone calls, from 60 to 120 days, and would refund inaccurate fees. But the 120-day window will not ensure that restaurants recover their losses, Enrico said. "It doesn't help with the thousands of dollars you lost in the previous months," he said. "You should fix the past to get ahead."
Fees are expected to be one of the main topics of discussion at the first restaurant roundtable, which will host a Grubhub manager, Kevin Kearns, at the company's Manhattan office on Tuesday afternoon.
Over the summer, restaurant owners also began to question another Grubhub practice: buying Internet domain names for thousands of restaurants, so customers searching for them online would be asked to place orders through the delivery service. Ms Norris, the Grubhub spokeswoman, said the company discontinued that policy in 2018 and at least always got the restaurant's permission to establish such “microsites.”
But in June, an article in the industry publication New Food Economics that detailed the practice led to a shout from restaurant owners who said they hadn't realized that signing up for Grubhub basically meant signing away the rights to their online identities. To regain control of their digital profiles, some owners work with ChowNow, a California-based company that helps restaurant owners develop their own apps, and requires a monthly subscription fee instead of a per-order order.
"The restaurants wake up and say," I need to own my website, I need to own my customers, I need to own my identity online, "said Chris Webb, who runs ChowNow.
Haruki Kai, co-owner of Sushi Ryusei in Manhattan, said Seamless has benefited his new business, generating around $ 1500 a month in profits. But given the popularity of online delivery, Kai said he thinks the number should be even higher. He now offers a 10 percent discount to customers who bypass Grubhub and order through his ChowNow app instead.
"So far we are fine," Kai said, "but still 30 percent is for high fees."