Grubhub Hit With Lawsuit for Listing Restaurants Without Permission

Two restaurants have initiated a potential class-action lawsuit against GrubHub for allegedly listing 150,000 restaurants to its site without the businesses’ permission. The Farmer’s Wife in Sebastopol, California and Antonia’s Restaurant in Hillsborough, NC filed the suit with Gibbs Law Group, accusing Grubhub of adding their restaurants to its site despite not entering into a partnership, which causes “significant damage to their hard-earned reputations, loss of control over their customers’ dining experiences, loss of control over their online presence, and reduced consumer demand for their services.”

Grubhub has explicitly made this false partnership part of their business strategy. Last October, CEO Matt Maloney said the company would be piloting a new initiative of adding more restaurants to its searchable database without entering into an official partnership with them, so customers would believe they had more delivery options with Grubhub, and wouldn’t switch to competitors.

It works like this: if you happened to order from a non-partnered restaurant, “the order doesn’t go directly to the restaurant,” says the lawsuit. “It goes instead to a Grubhub driver, who must first figure out how to contact the restaurant and place the order. Sometimes it’s possible to place orders with the restaurant by phone, but other times the restaurant will only accept orders in person. The extra steps often lead to mistakes in customers’ orders and often the restaurant won’t receive the order at all.” Grubhub also wouldn’t warn restaurants before they were listed, which led to restaurants suddenly being inundated with Grubhub orders they never expected.

Often, Grubhub would list outdated menus with the wrong prices, or include restaurants that don’t even offer take-out, leading to canceled orders. The lawsuit includes screenshots from the pages Grubhub created for The Farmer’s Wife and Antonia’s, using their respective names and logos. The Farmer’s Wife alleges the pages are “inaccurate and suggests that The Farmer’s Wife is offering to make food that it does not actually make and has never made,” which the lawsuit claims hurts the restaurant’s reputation, and leads customers to become frustrated with service the restaurant never agreed to provide in the first place. And both restaurants say the language Grubhub uses suggests a partnership that doesn’t exist, and in Antonia’s case, was actively declined when Grubhub approached them.

Grubhub declined to comment to Eater about the lawsuit. Last year, a Grubhub representative told Eater it was adding restaurants without their permission “so we will not be at a restaurant disadvantage compared to any other food delivery platform,” but said it would “without hesitation remove any restaurant who reaches out to us and doesn’t want to be listed on our marketplace,” putting the onus on any restaurant owner to proactively check Grubhub to be sure their business isn’t being listed. However, according to the lawsuit, Grubhub has not removed The Farmer’s Wife’s or Antonia’s from its site, despite multiple requests to do so.

The same rep also previously told Eater that Grubhub essentially hoped that adding restaurants without their permission would convince them to join. “When we add restaurants they’ll see orders, and see the benefit of the Grubhub platform,” she said. Unfortunately, this has been a common practice with the third-party delivery industry. In 2015, DoorDash got in trouble for delivering In-N-Out without its permission, and Postmates has also added restaurants without their permission. There’s also the practice of delivery services confusing restaurants. Last January, chef Pim Techamuanvivit noticed her restaurant Kin Khao was listed on DoorDash, even though it doesn’t offer delivery, and the menu looked totally different. It turns out DoorDash had listed the ghost kitchen Happy Khao Thai as Kin Khao. Grubhub has also been sued over its phone practices. Munish Narula of Philadelphia restaurant Tiffin sued the company for “charging commissions on those phone calls that are routed through Grubhub, without his knowledge, even if the phone calls don’t result in a customer placing an order.”

The lawsuit comes at a time when in-person dining restrictions and safety concerns are driving more restaurants than ever to use delivery to stay afloat, and when there has been renewed scrutiny of the practices of third-party delivery services. Over the past few months, Instagram posts outlining just how much delivery services like Grubhub and DoorDash charge restaurants have gone viral, with diners outraged at how much of their money isn’t going to the restaurant they wanted to support. “For example, one restaurant owner recently posted a statement from Grubhub showing that out of $1,042.63 in 46 pre-paid orders, he received only $376.54 from Grubhub,” says the lawsuit, presumably referring to a post from Giuseppe Badalamenti, owner of food truck Chicago Pizza Boss, about his March earnings. Brooklyn restaurant Hunky Dory also recently shared its delivery fee breakdown, saying $619 in sales on a rainy Friday night was only $464.25 after Caviar/DoorDash fees.

Third-party delivery services have proliferated because they allow a restaurant to outsource delivery, which can be costly and time-consuming to implement in-house. But this transparency has led to more calls to order from restaurants directly, and multiple cities to cap the commissions these services can collect. California Governor Gavin Newson also recently signed the Fair Food Delivery Act, which would make the practice of adding restaurants to delivery platforms without their permission illegal.

“Restaurant owners should be able to affirmatively decide whether to affiliate with Grubhub to offer delivery and takeout services,” said Steven Tindall of Gibbs Law Group in a statement. “For Grubhub to unilaterally add restaurants to its platform without their permission or authorization, the company is improperly denying restaurant owners the right to make their own business decisions and to control the reputations they have built.”