May 5th, 2014  |  Published in Business

Is Seamless Really Seamless?

By Jenna Dagenhart

GrubHub and Seamless stickers cover many doors, indicating that the restaurants are online.

GrubHub and Seamless stickers cover many doors, indicating that the restaurants are online. Photo: Jenna Dagenhart.

People say there’s an app for everything.  These days, that’s true— especially when the clock strikes dinner hour in a city that never sleeps, let alone makes time to cook or sit down at a restaurant.

Two frontrunners have emerged in the race to develop apps to help New Yorkers eat: GrubHub.com and Seamless. Both operate 24/7 in New York, as well as in London and several hundred United States cities.  Seamless offers 80 different ethnic cuisines from 12,000 different restaurants, and GrubHub.com offers takeout from 28,800 restaurants.

GrubHub went public in early April with a $192 million IPO, selling 7.4 million shares.  Within hours of the offering, the stock soared 50 percent to $39 a share, which gave the company a market capitalization of more than $3 billion. And there’s one irony for people with allegiance to one brand over the other: Seamless and GrubHub merged into a single company last August, run by CEO Matt Maloney.  Maloney, 38, co-founded Grubhub with Mike Evans in 2004 and was named CEO in August 2013, during its merger with Seamless. Seamless has been around slightly longer— since 1999— and has a much stronger base in New York, but GrubHub, which popped up in 2004, has become its younger, yet bigger parent company.

“GrubHub is our national brand, so most markets in the U.S. are under GrubHub. Seamless we’ve really pulled back to Manhattan,” Maloney explained to Forbes.

Operating costs are fairly low because most people already own the means to access the service: a cellphone.  “More than two in five adults have used a smartphone to find restaurant locations and directions, or viewed menus, and 43 percent have ordered takeout or delivery orders online,” the National Restaurant Association announced on the same day as the GrubHub IPO.  Customers simply open these apps on their electronic devices, place an order, then wait for the pre-paid food to be delivered to their doors. The company takes an average commission of 13.5% per order, according to Quartz global news outlet, but the restaurant gets to pick its commission. The higher the commission, the higher the company will appear on the online search results.

Restaurant managers had mostly positive words to share about the delivery services, which drive more business without clogging up the in-store lines.  “It’s very easy for us—for service, for everything.  Time is very important, and it takes away from our lines,” said 41-year-old José Cedano, the Nussbaum & Wu bakery and café night-shift manager.  “The only downside is when customers cancel orders,” which can mean wasted food and delivery time. If customers do wish to change or cancel an order, Seamless has these guidelines on its site: “Please call the restaurant directly. The restaurant’s phone number can be found on your email confirmation or by logging back onto the Seamless site. Once you have canceled or changed the order with the restaurant, please notify Seamless of the change or cancellation by responding to your order email confirmation.”

Most New York City restaurants use bicycles for delivery, which save time and money: The delivery person can weave through traffic, and fuel costs don’t get layered onto the bill. Fidel Basarto, 25, makes these trips almost every day for Legend restaurant on the Upper West Side — about 30 deliveries on a full-day shift, and half that for a half-day. “Seamless is a good thing because it brings more freedom for everyone,” said Basarto, speaking in Spanish, waiting outside an apartment lobby for his customer to come downstairs.  “People use their cards and order more, which is good for us.”  The tips can also be included when people pay online.

For some, delivery is the only option when working late or overnight shifts. “By 6 p.m. you can see the Seamless delivery men lined up outside our office in Times Square, as one by one, hoards of hungry 23-year-olds yell the restaurant name they ordered in search of their meal,” said Dan Smith, an investment banker at BMO Capital Markets.  “By 9 p.m., takeout boxes are piled up to the ceiling and it smells like a mix of cheap Chinese food, pizza, Thai, and Indian. By the time the morning rolls around, the previous night’s feast has been cleared and the cycle of seamless ordering repeats.”

So many young investment bankers use Seamless that it’s become a cliche, an expected expense on the corporate credit card.  “I usually order twice a day (one dinner order and one late night) and it means 10-12 times a week (if I include weekends). I order so often because my company gives me a $25 budget for dinner and then another $15 if I work past midnight. It’s hard to turn down free food every day,” said 24-year-old Charles Jang, a recent graduate of Georgetown University working at the Rothschild financial advisory firm in New York. “All I have to do is go to the website, pick a restaurant and order as much as I can.”

But even some loyal customers have their complaints. “Some negatives include the limited options of restaurants that are open and nearby,” said Jang. “Another negative is that the time estimate provided from the website isn’t always accurate and you’re left waiting for food.”

Some customers say their credit card statements are one long list of deliveries.  “I’ve been surviving on GrubHub.com pretty much since I’ve moved here,” said Siddique Humayun, who came from Pakistan to study at the Columbia Graduate School of Journalism.   Many international students from countries outside the European Union say these services are unique to the United States need for their instantaneous results.  Mareta Grginovic, 26, is from Southern Croatia, and her first reaction was, “What? This is awesome! In Croatia there’s no culture of ordering food.”

“When I tell my parents I ordered food again, they tell me I’m lazy, but I tell them the culture of ordering food in the U.S. is practical instead of lazy,” she said. While she has had a few frustrating experiences with slow service, deliveries are generally very prompt or even early.  “It kind of gives you the impression that they care about you when they bring your food so quickly, even though you’re ordering it online in a distant, impersonal way,” she said.

Twitter user Melanie Marquez in Los Angeles also wondered what her relatives would say about her delivery.  “About to get my grub on thanks to @Seamless #ChineseFood for #Hanukkah/ #Thanksgiving… My grandparents would be proud,” tweeted Marquez in November 2013.

Other users use the speedy food service for health reasons, believing it leads them to make more informed decisions than if they ate at a restaurant.  “If you look at my Visa card statement, every other charge is Seamless,” said Ashley Papagni, a former Florida on-air reporter studying broadcasting at Columbia.   “I do it because I hate the cold, and I feel looking at a whole menu online gives me healthier options rather than sitting down and being persuaded by specials, menu distribution, etc.”

“Smartest decision I ever made #GrubHub #delivery #thaifood #hangry,” tweeted @MeganBarquist in Henderson, NV with an attached picture of her order confirmation text message, using a slang term for someone who is angry or on edge simply because he or she is so hungry.

Several niche delivery services are cropping up for people with specific needs and restrictions.  Blue Apron and Eat Tribal are two start-ups committed to paleo, a diet based on the ancient Paleolithic era high-protein diet that steers away from processed foods and focuses on grass-fed meats, fish, fruits and vegetables.  There are also apps, such as Kitchen Surfing, that are designed to bring the restaurant into your home, so that when you order your food, you’re also ordering a private chef for the evening. Options range from a $120 date-night cooking class to a $750 service of cocktails and dinner for nine people.  Also on the expensive side is Caviar, a delivery service modeled around luxury that takes pride in having a GPS delivery tracking service and exclusive ties to restaurants not on GrubHub/ Seamless, such as Katz’ Delicatessen, Blue Ribbon Sushi and Porchetta.

What happened to the days of calling Domino’s?

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