US-based food ordering and delivery platform Grubhub is scrapping delivery and service charges on restaurant orders over $50.
According to a Bloomberg report, the move is aimed at drawing customers away from rivals DoorDash and Uber Technologies.
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The new structure will initially appear for limited users, with a broader availability planned from 2 February.
In an interview with the publication, Grubhub CEO Howard Migdal said the initiative is intended to draw in fresh customers and drive larger orders.
He added that the company expects the change will enable customers save “hundreds of millions of dollars per year” paid in fees, calling them the “biggest pain point” for the food-delivery sector.
Migdal noted that for orders above $50, the average delivery and service fee across competing apps is approximately $13.
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By GlobalDataHe added that 81% of Grubhub users have at some point filled their basket and then abandoned the purchase after seeing the total fees.
In addition, Migdal stated the choice to waive fees on orders above $50 reflects a focus on building long-term customer loyalty rather than maximising near-term earnings.
Notably, Grubhub was acquired by Wonder Group early last year for an enterprise value of $650m.
Over the last 18 months, Grubhub has invested into widening its footprint, adding more than 100,000 restaurants to the platform and extending coverage across more US suburban areas.
Migdal added that this now brings the service within reach of 90% of US consumers.
Earlier this month, Grubhub-parent Wonder acquired restaurant rewards app Claim.
The app lets consumers access cash-back offers from local restaurants and redeem them on dine-in or pick-up orders.
