Grubhub Forces Partnership With Restaurants, Class Action Lawsuit Claims

Two restaurant owners from two different states are filing a class action lawsuit against Grubhub in a fight to take back control from the food delivery app. 

The complaint alleges Grubhub lists some 150,000 restaurants on its app without permission, resulting in a loss of control over the food the restaurants make and experiences they deliver.

Both owners from Farmer’s Wife and Antonia’s, restaurants in California and North Carolina respectively, claim Grubhub has included their menu on the app, despite repeated requests to have them removed. 

The move had these unsuspecting restaurants getting swamped with orders, oftentimes asking for things that weren’t even on the menu or listed at the wrong price, according to the complaint. 

Kendra Kolling, a plaintiff in the class action lawsuit and the owner of the Farmer’s Wife in Sebastopol, California, says there were dishes listed on her page in the Grubhub app she had never made. Antonia’s owner, Lynn Scott, says she denied Grubhub’s request to be listed but they did so anyway, according to the complaint.   

The restaurant owners say Grubhub has taken aggressive steps to include as many eateries as it can to maximize return to the company’s shareholders.

A 40% drop in share value following slashes in earnings back in Oct. 2019 had Grubhub scrambling to claw back the market share it was losing to competing apps like Postmates and DoorDash, according to the complaint. 

In order for the delivery platform to stay ahead it would have to add non-partnered restaurants, Grubhub representatives said in a statement to Eater in 2019. 

“We’re deploying a sales team to try to convert these restaurants to partners, because it’s a better experience for anyone involved,” Grubhub’s Corporate Communications manager Kattie Norris said to Eater. “We think when we add restaurants they’ll see orders, and see the benefit of the Grubhub platform.”

The class action lawsuit further takes issue with Grubhub’s commission fees, claiming they take too much of the restaurant’s profit. The complaint points to one restaurant who sold $1,042.63 in pre-paid orders, but after Grubhub’s cut, was left $376.54.

The restaurant owners taking legal action against Grubhub claim this way of doing business also hoodwinks the users of the app. Customers think they’re patronizing and supporting a local eatery, Kolling said in the complaint, but they are actually widely helping Grubhub. 

Plaintiffs are seeking owners of all restaurants who were included this way on Grubhub platform to join the class action lawsuit. They’re asking for injunctive relief as well as statutory, treble and punitive damages. The class action lawsuit formally accused Grubhub of violating the Lanham Act. 

While these restaurants were adapting to this forced participation, Grubhub business was booming. The drop in stock had recovered, according to the class action lawsuit, and revenue targets had been met. By June 2020 Grubhub had sold its business for $7.3 billion. 

Do you order food on Grubhub? Did you know about the fees they impose on restaurants? Do you think it’s fair for Grubhub to include a restaurant without permission? Let us know why or why not in the comments below. 

Counsel representing the plaintiffs in this class action lawsuit are Elizabeth A. Fegan of Fegan Scott LLC; Steven M. Tindall, Geoffrey A. Munroe and Alex J. Bukac of Gibbs Law Group LLP.

The Grubhub Forced Partnership Class Action Lawsuit is Scott, et al. v. Grubhub Inc., Case No. 1:20-cv-06334 in the U.S. District Court for the Northern District of Illinois, Eastern Division. 

Read About More Class Action Lawsuits & Class Action Settlements:

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• DoorDash Class Action Lawsuit Says App Steers Users Away From Non-Partner Restaurants
• Food Delivery Apps Class Action Claims Unlawful Price-Fixing
• DoorDash Customer Class Action Lawsuit Claims Tip-Skimming Policy Misled Customers