Uber Eats takes a swipe at GrubHub after free lunch promo

Yahoo Finance Live anchors discusses Uber Eats taking a swipe at GrubHub after its free lunch promo.

Video Transcript

AKIKO FUJITA: Uber is taking a swipe at Grubhub after the food delivery giant's free lunch promo experienced glitches amid massive demand in New York City earlier this week. Bloomberg reports Uber Eats sent an email out with the subject title, "There's no such thing as a free lunch," along with a $25 coupon for users. Many on social media had complained about Grubhub's rollout, citing issues with rejected payments and error messages. We both went in on the promo.

BRIAN CHEUNG: We did.

AKIKO FUJITA: I mean, first of all, can you-- who would have thought, right? You hand out free lunch to a city for two hours-- the largest city, by the way. And--

BRIAN CHEUNG: And there's going to be some problems, yeah.

AKIKO FUJITA: There's going to be some problems.

BRIAN CHEUNG: Who knew? Who knew that was going to happen? Well, for what it's worth, I did use my promo on a Subway sandwich, a foot-long Italian BMT on Italian herbs and cheese. And it actually got fulfilled, but Grubhub didn't realize that the order did get fulfilled so they refunded me anyway. So your boy has another free lunch that I could take advantage of here.

AKIKO FUJITA: Well, no, but you can't do-- oh, you got a refund.

BRIAN CHEUNG: I got a refund. So I have another free lunch credit that I can use, so.

AKIKO FUJITA: That is winning.

BRIAN CHEUNG: Yeah, well, I mean, a lot of other people may have gotten this, too. And that's probably bad for Grubhub because they handed out a bunch of promos to people like me who are going to get two lunches out of this, but.

AKIKO FUJITA: I had an interesting conversation yesterday because I did takeout. I went into the restaurant, and the guy looked at my name. And he said, are you trying to reclaim that promo from Grubhub on Wednesday? He's like, I recognize the name. And I said, well, you know--

BRIAN CHEUNG: This is Akiko Fujita coming in.

AKIKO FUJITA: Well, his point was, there were a lot of there were orders that we could not fulfill. And I asked him, and I said, well, how was it then? And he just stood there and just shook his head, which is, I think, what a lot of restaurants did. By the way, a lot of restaurants didn't know the promo was happening and suddenly got flooded with orders.

BRIAN CHEUNG: And on a serious note, that is really-- those were the big losers during all of this, right? The poor folks at these restaurants who just weren't ready for this massive surge, and then all of a sudden, they had to cancel orders. People showed up to the restaurant. Or the driver showed up, and they got mad at them. People joking that this whole thing was about as functional as the subway system.

AKIKO FUJITA: This is my favorite tweet, by the way.

BRIAN CHEUNG: That's a good one. I made a joke about the supply chain thing, right, where, oh, it turns out that if you give stimulus to a bunch of people, it's going to create bottlenecks and supply chain issues. Like, that's exactly what happened. And for the record, even before this promo, these types of delivery apps, I feel like, are sending out a lot of promos all the time. I get notifications from Uber Eats, from Postmates, from Grubhub, from all these services all the time, saying, here's $10, $15 off your order. It still feels like we're in that early subsidization kind of phase.

AKIKO FUJITA: Well, and guess who jumps on it every time? I do. I see it, and I want to order it. But you're right, it's an incredibly competitive space. And so the fact that Uber Eats is now responding, points to that. I do wonder whether despite everything that happened with Grubhub, you know, what the net gain is for the app, because, you know--

BRIAN CHEUNG: Well--

AKIKO FUJITA: --we were saying, I don't often use Grubhub. I tend to use DoorDash and Caviar and a lot more. And you realized that day, when you're looking through Grubhub, their restaurants or their selection isn't as good.

BRIAN CHEUNG: It's not that great. Well, here's the thing, is that there's so much competition in this space, and the margins in this business, as we've explored many times before, are really not that good. So it's all about scale. How do you build up scale? You've got to get as many people using the app as possible. That means getting the promos out there.

And at some point, you have enough traffic coming to your app. You have enough market share, you can convince more of those good restaurants to be listed on your app as opposed to the other ones. And when there's, what, five, six, seven of them out there, there's just simply too many. So but at least Subway was on Grubhub so I can get my yoga mat sandwich any time I want. So at least, there's that.

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