6,000 per minute. That's how many orders New York City restaurants were receiving from Grubhub at the height of a recent promotion gone awry. On May 17th, eager to grow its NYC business, the food delivery app surprised customers with a limited-time offer that provided $15 off any order made between 11am and 2pm that day. New Yorkers pounced on the deal. But Grubhub wasn't prepared for the madness that would ensue--and neither were restaurants, who reported having never received prior notice about the promotion.
As orders piled up faster than anyone could fill, restaurateurs and delivery drivers described the experience as a "war zone." Grubhub announced that around 450,000 orders were delivered, but many customers reported having to wait several hours for their lunch to arrive, with some orders coming in as late as 8pm and many not arriving at all.
Not only did the experience anger customers using the app, but the partners responsible for preparing and delivering orders were also irate. Restaurant owners dedicated to customer service were outraged; one operator summarized the sentiment of all in a tweet: "@Grubhub you didn't communicate with businesses. In fact you didn't even ask if we wanted to participate in this. Today you threatened our reputation and violated our boundaries. Pay us the money you stole from us today. #dontbuyongrubhub."
Customers who didn't receive their orders on time or at all were left in limbo for days, unsure if they would get a refund or any support from the food delivery service. Those who reached out to customer service were met with hours-long wait times, no online chat service, and a crashing app.
Days later, on Thursday the 19th, Grubhub announced that it would be refunding customers, but with several caveats: refunds would come only for customers who didn't receive their orders (and not for customers who waited hours) and would be made in the form of credits on the app.
Despite the public outrage, Grubhub's response has ranged from nonchalant to downright tone-deaf. Tweets from the brand throughout the 17th continued to encourage orders, jovially suggesting that the $15 promotion somehow equated to an entirely free lunch, and worse yet, not-so-subtly placing blame on restaurants for not being prepared.
David Tovar, a Grubhub spokesperson, went so far as to call the promotion "a huge win" because the initial announcement of "free lunch" led to an acquisition of new diners and reactivated customers for a "very low" marketing cost. But in a time when 96 percent of customers will leave a brand after one bad experience, Tovar's words seem incongruous with the current moment.
How severe the fallout may be from this debacle is yet to be known, but CX experts everywhere should take note from what we've learned so far. Here are four key takeaways:
Lesson 1: Don't Center Your CX Strategy Around Variables You Can't Control
Like all food delivery apps, Grubhub must rely on independent third parties to deliver its service. Restaurants do not answer to Grubhub and delivery drivers are independent contractors, able to work for any competing platforms they choose in tandem. This creates a fragile ecosystem built upon mutual respect--one that came crashing down quickly on the 17th when two legs of this three-legged stool were sideswiped by the "unexpected" surge of orders.
Delivery drivers in NYC were rewarded with surge pricing to keep them working. But drivers who had opted to take the day off were slammed with push notifications from Grubhub begging them to come to work in exchange for bonus pay. Drivers reported making hundreds of dollars more than a typical day as a result, ensuring Grubhub earned further loyalty from them. However, the resulting issues with Grubhub's app extended far beyond New York, and drivers around the rest of the country felt the pain as the app continued to fail, leading some to average only $3.50 per hour of work that day. What's to stop these drivers from leaving Grubhub in favor of the more popular Doordash (which boasts a 59 percent market share) or UberEats (with a 24 percent market share) going forward?
In addition to the potential fallout with delivery drivers, Grubhub now has to face an extremely angry restaurant industry in the most populated city in the US. Restaurants reported losing money because of this promotion and fear losing customers due to a sullied reputation from this bad experience.
Not only did Grubhub take a risk in centering this promotion around variables entirely outside of their control, but they made things worse by poorly communicating with restaurants and drivers and limiting the promotion to an exhausting three-hour window which was in their control. Had they simply provided a $15 credit to all users without a time limit (and informed their partners of the upcoming deal), this entire situation may have been avoided.
Lesson 2: Find Opportunities in the Mistakes of Your Competitors
In the wake of Grubhub's public mishap, competitors like UberEats and Dig saw opportunity. Within days, the two businesses sought to make up for Grubhub's mistakes by offering more tantalizing promotions to NYC residents.
UberEats users received an email with a tongue-in-cheek subject line that read "There's no such thing as free lunch" followed by a winky face emoji. Upon opening the email, they found a $25 coupon to use on UberEats, no strings (read time limit) attached.
Dig, a fast-casual NYC restaurant chain with its own delivery app, sent out a promotion asking users if they were "still hangry from Tuesday?" This was followed by a referral discount for anyone who downloaded the app.
When your competitors make such a publicly egregious error that sends customers fuming, consider ways you might capitalize from their mistakes. UberEats and Dig showed their customers that they appreciate and understand the pain they went through. They offered a solution before Grubhub even announced a decision on refunds, likely earning long-term customer loyalties as a result.
Lesson 3: Ensure CX Touches Every Level of Your Organization
In hindsight, it seems like the "war zone" resulting from this promotion could have easily been predicted (and prevented) had the team that came up with the promo consulted with their CX strategists first. But, too often, CX is siloed into a department focused only on reacting to customer needs as they arise rather than being utilized at a unified, proactive level across a business.
A great CX strategy is wholistic. It identifies pain points in the end-to-end customer journey and solves for those pain points before they happen. CX teams should act as a devil's advocate when big PR stunts are planned because it's their job to always represent the needs of the customer. But this isn't possible if your CX team is only empowered to act when a customer is in need. CX must touch every level of your organization and any planned promotions should pass the CX snuff test before the damage is done. The old adage, "better safe than sorry" comes to mind.
Lesson 4: Don't Sweep Mistakes Under the Rug
Perhaps the most surprising thing to come from this Fyre Festival of food delivery has been the response from Grubhub itself. From downplaying responses from a furious NYC populace as being "unintended consequence[s]" to bragging on the 17th that "we're the talk of the town," Grubhub has shown its hand as a brand out-of-touch with its customers or partners.
Recent studies suggest that 41 percent of customers will return to a brand that properly apologizes for their actions, but this requires truly acknowledging customer sentiment. When a failure of this magnitude is met with such a dispassionate response, it's like sweeping rocks under a rug: you might hide the rocks, but now you're contending with a bumpy and sharp rug.
In the end, this was a numbers game focused on inflating its user base in a city that has been at war with the delivery service for years. Grubhub's market share in the Big Apple has been dropping steadily since it's 2020 peak of 72 percent. At the launch of this promotion, it was only 42 percent and I predict that number will fall further simply because Grubhub's response has been so apathetic.
Brands can and will make mistakes. But how those mistakes are handled can make or break a brand in the eyes of consumers who have more choice than ever before. Today's customers demand accountability, and Grubhub missed their chance to step up to their mistake with grace. With so many alternative providers to choose from, Grubhub's days might be numbered in NYC and elsewhere.
CX experts everywhere should take note: when brands prioritize transactional moments over transformational relationships, they miss the opportunity to create real lifetime value for themselves and their customers. Talk about unintended consequences.