Is Seamless Destroying Restaurants?

As it gets easier to sell things and offer services, some businesses find it harder to make money doing so.

Photo: Bloomberg

Photo: Bloomberg

An enlightening story from Bloomberg Businessweek takes a look at Seamless and the online-takeout trend from a Brooklyn restaurant owner’s point of view. Pedro Muñoz, the owner of Latin American restaurant Luz, decided to cut ties with Seamless after his restaurant suffered from the service’s high fees—more specifically, a 14 percent commission from every order. Additionally, Luz discloses that Seamless holds funds for 40 days before distributing them, which has led to Luz having less cash on hand to keep his restaurant running. “It’s awesome if you’re a customer. It’s great,” Munoz says. “But in all aspects it’s killing the restaurants. It’s a model that cannot be sustained.”

After Seamless merged with its largest competitor, GrubHub, New York Attorney General Eric Schneiderman reached a deal “intended to ensure the combined company doesn’t enjoy an unfair advantage.” The deal lets restaurants get out of their exclusive agreement with Seamless/GrubHub within 45 days, and requires the online ordering company to observe an 18-month moratorium on any new agreements with restaurants.

But Schneiderman’s plan might not be enough to keep Seamless/GrubHub from monopolizing the online-ordering game. James Versocki, counsel to the New York State Restaurant Association’s chapter in the city, says “You’re pushed out of the market for delivery if you don’t use them [Seamless].”

Will more independent restaurant owners like Munoz become so annoyed with the drawbacks of partnering with Seamless that they go rogue anyway? “Muñoz, for his part, knows that Luz will be taking fewer orders starting next week. But he hopes the tradeoff will benefit his business,” reports Bloomberg. “We are going to lose some,” says Muñoz, “but I’d rather have a positive cash-flow business with less volume than more volume with less earnings.”

[via Bloomberg]

 

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