How Grubhub's Free Lunch Promotion Actually Cost Restaurants Money
It all started when a survey taken by the food delivery app, Grubhub, revealed that more than two-thirds of New York City workers skip lunch because they're simply "too busy," per Yahoo Finance. To help these beleaguered over-workers break the lunch-skipping habit, Grubhub set about promoting a $15 credit toward food deliveries between 11 a.m. and 2 p.m. on Tuesday, May 17. As per Grubhub, all one had to do to take advantage of this offer was to place an order using the promo code "FREELUNCH." Although the $15 did not cover tax, tip, or delivery fees, and despite that workers were on their own with regard to finding the time to actually chow down, New Yorkers and those in adjacent suburbs that were included in the promotion were still totally there for it.
In fact, no sooner had Grubhub opened these floodgates, did orders begin flooding the Grubhub app, per Eater, although that is putting it mildly. Apparently, more than 400,000 people attempted to take advantage of this not-quite-free lunch promotion, with roughly 6,000 orders per minute at one point, per NPR. The upshot? Free lunch meets free-for-all.
Within minutes, the Grubhub platform was glitching and crashing, delivering to many what turned out not to be lunch so much as error messages, endless wait times, and ongoing aggravation. Dissatisfied and presumably still-hungry customers took to social media to express their outrage. But that doesn't begin to describe the reaction from participating restaurants.
Despite the epic fail, Grubhub is trying this again
If you tend to already think of New Yorkers as angry, imagine how things went when thousands of them jumped on Grubhub's "FREELUNCH" promotion only to find themselves, well, lunch-free. But that's pretty much the upshot of Grubhub's offer of $15 off the price of lunch on May 17, which went off the rails due to technical difficulties, and questionable business judgment as Grubhub kept promoting the deal even amid the ensuing chaos, and the poignant reality that humans simply cannot do what cannot be done, which, in this case, was to keep up with the demand Grubhub's promotion inspired.
As a result, some restaurants ended up having to shut down during the promotion (per Twitter). For many of those that stayed operational amid the chaos, the increase in orders did not translate into an increase in cash-flow, but rather flat-out losses. "Even though it was our busiest day ever, we made less money," one restaurant owner told Eater, explaining that at his restaurant, the average lunch order dropped by around $10 — presumably in an effort by customers to keep their free lunch free. And then there were the refunds that restaurants were forced to issue when food was not delivered, not to mention the astounding food waste.
Now that all is said and done, Grubhub is set to do it all over again on May 31. However, this next promotion is for $5 off, as opposed to "free lunch." But everyone knows "free" doesn't actually exist.