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Without Seamless, Fewer Customers and Higher Margins


Without Seamless, Fewer Customers and Higher Margins

Photograph by Paul Taylor/Getty Images

Earlier this month, Pedro Muñoz told customers that his restaurant, Luz, would no longer use popular online food-delivery service Seamless because the site took a 14 percent commission and waited too long—more than a month, a lifetime in the overhead-heavy restaurant business—to give Luz its cut.

Luz, located in Brooklyn, wasn’t giving up online delivery altogether. Instead, Muñoz directed his customers to order straight from the restaurant’s website, betting that his savings could make up for lost Seamless business. So how’s it going so far?

On its first night without Seamless (Aug. 16, a Saturday), Muñoz says Luz took $669 worth of delivery orders. That’s down about 16 percent from the $800 in orders the restaurant typically received on Saturday nights when using Seamless and GrubHub, another online delivery service that recently merged with Seamless. Instead of losing 14 percent of the total to commissions, though, Luz paid only $16 for credit card processing and other ordering-related fees, meaning the restaurant netted $653—just 4 percent off the $680 it would have made with the help of Seamless and GrubHub.

“Notice that we would be roughly taking the same net amount with less work and less product out the door,” says Muñoz. “And we get the money in 48 hours instead of 40 days.”

GrubHub spokeswoman Abby Hunt says online services help customers find new restaurants, and GrubHub customers place larger orders on average than customers ordering over the phone. Among other things, she says, they’re more likely to add high-margin items such as sodas and desserts.

Many New York restaurants don’t feel they can afford to turn a cold shoulder to online-ordering services. This is especially true of those that hope to deliver lunches to Manhattan’s office workers, says James Versocki, counsel to the New York State Restaurant Association’s New York City chapter. “You’re pushed out of the market for delivery if you don’t use them,” he says. For now, though, at least one restaurateur in Brooklyn believes going it alone can work out.

Brustein is a writer for Businessweek.com in New York.

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