Grubhub has added more than 150,000 restaurants to its food-delivery platform without getting permission from their owners, a lawsuit filed this week in Chicago alleges.
According to lawyers for some of the eateries behind the complaint, Grubhub added "non-partnered restaurants" because company officials felt pressure from shareholders to boost revenue and beat competitors DoorDash and Uber Eats.
"Grubhub's decision to add unaffiliated restaurants to its platform may have reaped immediate dividends for Grubhub, but those gains came at the expense of restaurants who had good reasons for choosing not to partner with Grubhub," the complaint states. "By including those restaurants on its platform anyway, Grubhub is misleading consumers, who reasonably believe the restaurants have partnered with Grubhub and will be working cooperatively with Grubhub to provide them with accurate, reliable and timely service."
A Netherlands-based company called Just Eat Takeaway bought Grubhub for $7.3 billion in June. Grubhub declined to comment, citing the the pending litigation.
Grubhub lists 300,00 restaurants on its platform, and 245,000 are described as partners, according to its website. Company executives began publicly discussing non-partnered restaurants last October when CEO Matt Maloney said in an earnings call that Grubhub has tens of thousands of "non-partnered restaurants" on its platform and that "we've already made the call to scale this out, we're just announcing it right now."
Most of the eateries Grubhub added this spring were non-partnered restaurants, Grubhub President Adam DeWitt said in a May earnings call.
The lawsuit mentions two restaurateurs who said they were placed on Grubhub without their permission. Kendra Kolling, who owns The Farmer's Wife in Northern California, and Lynn Scott, who owns Italian restaurant Antonia's just outside the Research Triangle region in North Carolina, both said they've asked Grubhub to take their restaurant off the app, without success.
The suit, which is seeking unspecified damages, accuses Grubhub of violating federal false advertising and trademark infringement rules because the platform is profiting by using local restaurants' name, logo or menu.
Grubhub reported about $460 million in revenue for the second quarter, a 41% increase compared to the same period last year.
Competition among food delivery services is ferocious, stoked recently by a sharp increase in orders due to the pandemic. After Grubhub was purchased this summer, Uber bought delivery app Postmates for $2.6 billion in a move to expand its Uber Eats business.
DoorDash is the top food delivery service, ranked by monthly meal delivery sales, followed by Uber Eats and Grubhub, according to September data from Second Measure, a California data firm that analyzes consumer transactions.
First published on October 29, 2020 / 12:12 PM
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