Third-party Delivery Companies & a History of Lawsuits

Third-party Delivery Companies: High Fees, Lawsuits, and Other Issues

A delivery driver walks into a local restaurant ready to pick up an order, but the restaurant owner didn't know he was coming – worse, he didn't even think his restaurant offered delivery. Unexpected delivery drivers are a common problem in the age of third-party delivery apps. Industry leaders such as Grubhub, DoorDash, Postmates, and Uber Eats have all been accused of adding restaurants to their respective platforms without a prior agreement, sparking frustration among restaurant operators. These delivery companies have also been the subject of several lawsuits regarding price exploitation, racial discrimination, and advertising non-partnered restaurants. Below, we'll go over the problems restaurant owners have with third-party delivery platforms as well as lawsuits and accusations against these companies.

High Fees, Rapidly Growing Delivery Platforms

Traditionally associated with catering of specific segments such as pizza and Chinese food, third-party delivery operations – Grubhub, DoorDash, Postmates, and Uber Eats – have been gaining steam industry wide. These apps, which allow contracted delivery drivers to retrieve orders from restaurants and deliver them to the consumer accounted for nearly $20 billion of $24.65 billion dollars of online food delivery revenue in 2020.1

While many restaurants have welcomed the positive aspects of these services as a boon in uncertain times, others balk at the prospect of high fees and lack of control over the delivery process.2 However, one of the biggest problems for restaurants arises when those that don't wish to be listed on these apps are added without their knowledge or consent.

Restaurant operators have reportedly found themselves scrambling to respond to complaints about incorrect pricing and requests for menu items ordered from outdated menus, as well as fielding phone calls from unhappy customers asking about overdue orders.3

For unpartnered restaurants, orders are either called in by the driver or a delivery operation employee or placed when the driver reaches the restaurant. The driver then pays using a payment card issued by the company. If a driver gets caught up with other orders and can't place an order until reaching the restaurant, wait times can be very long for the customer.

Why is my Restaurant on Grubhub or Another Third-party Delivery Site?

The third-party food delivery industry has been rife with lawsuits from alleged unfair treatment of contracted drivers to accusations of racial discrimination when calculating delivery fees.4 Perhaps the biggest outcry against the third-party food delivery industry relates to the practice of adding restaurants who haven't entered partnerships with delivery services.

Grubhub has faced a host of recent complaints not only from these unpartnered restaurants but from restaurants that have contracted with the service and charge rising fees or commit actions that effectively monopolize a restaurant's online presence.

In October 2020, a class-action lawsuit targeted Grubhub for reportedly listing more than 150,000 restaurants on its platform without their permission. The lawsuit was spurred by restaurants that claim the delivery service also failed to remove them upon request.5

DoorDash has long listed unpartnered restaurants as a marketing technique, facing a lawsuit as far back as 2014.6 In-N-Out Burger and DoorDash ultimately settled out of court in 2015 after the California-based chain sued the delivery service for using the restaurant's logo on its site and delivering its food without consent.

In 2020, DoorDash faced lawsuits for treating unpartnered restaurants differently than ones that paid "exorbitant" partnership fees.7 Restaurants allege that the service used deceptive techniques to filter customers toward partnered restaurants, including incorrectly listing restaurants as closed or too far away.

While Uber Eats and its now subsidiary Postmates have not been involved in high-profile lawsuits related to listing unpartnered restaurants, they do engage in the practice. Both services have been named, along with Grubhub and DoorDash, in a 2020 lawsuit that claims delivery services were capitalizing on the need for delivery by charging excessively high fees to operations that had already signed a partnership contract and prohibiting the operations from offering discounts to customers not ordering through the services.8

Legislation Against Third-party Delivery Companies

Lawsuits have taken place in several states against delivery services for several reasons:

  • In California, legislators have recognized the issues created when delivery services solicit orders for non-partnered restaurants. As of 2021, California bans delivery services from advertising food from restaurants in the state without the restaurants expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility.9
  • Denver authorities have focused on regulating partnerships with these companies by limiting fees associated with orders.10 Lawsuits against these delivery services are often over price exploitation, with restaurants and customers claiming they raised prices on meals and delivery fees, exploiting their dominance in this industry.11
  • Several lawsuits were filed in Chicago against third-party delivery services for taking consumer tips and paying the company rather than its workers. These same lawsuits included that delivery services were charging a "Chicago fee" and claimed the fee was administered by the city when it wasn't.12
  • The District of Columbia filed lawsuits against a delivery service that required restaurants to pay the company to foot its promotions.13

Requesting Removal from Third-party Delivery Websites

Restaurant can choose to use these third-party services or utilize in-house delivery. For most restaurant owners, using a form of delivery is a valuable revenue source, but it is important to consider whether partnering with a third-party delivery service is a good choice for your business.

Although most businesses in today's industry offer a takeout or delivery option, third-party services may not work for every operation. If your operation wants to handle delivery independently and you find your menu listed on these services without prior approval, all four major delivery services offer a process for initiating removal from the platform.

How do I remove my restaurant from Grubhub?

Unlike other platforms, Grubhub does not offer a removal request on its website, but the company can be reached via email. According to various news outlets, Grubhub directs restaurants interested in being removed from the platform to contact restaurants@grubhub.com. Other sources have listed restaurantremoval@grubhub.com as an alternate email the company uses for correspondence related to the issue.

How do I remove my restaurant from DoorDash?

DoorDash directs non-partners to contact merchant support with requests to deactivate using a provided form and directs them to use that form for further inquiries if their restaurant has still not been deactivated.

How do I remove my restaurant from Uber Eats?

Uber Eats offers a restaurant removal request form on its website.

How do I remove my restaurant from Postmates?

Postmates offers a removal request form to restaurants and other stores listed on its platform.

References

  1. Online Food Delivery – United States. Statista. Accessed September 2022.
  2. Pros and Cons of Restaurants Using 3rd Party Delivery Apps. Society Insurance. Accessed September 2022.
  3. Chicago Restaurant Owners Upset with Grubhub After Old Menus Posted. WGNTV. Accessed September 2022.
  4. Uber Eats Faces Discrimination Allegations Over Free Delivery from Black-owned Restaurants. TechCrunch. Accessed September 2022.
  5. Grubhub Hit With Lawsuit for Listing Restaurants Without Permission. Eater. Accessed September 2022.
  6. In-N-Out Sues Delivery Service Doordash. CNN Business. Accessed September 2022.
  7. Restaurant Files Class Claims Against DoorDash for Deceptive Business Practices. Counsel Financial. Accessed September 2022.
  8. Uber Eats, Grubhub, DoorDash, and Postmates Face Class-Action Lawsuit Over 'Exorbitant' Fees. Forbes. Accessed September 2022.
  9. New California Law Could Spoil Some Growth for Food-delivery Platforms. The Wall Street Journal. Accessed September 2022.
  10. Denver OKs Regulations on Third-party Food Delivery Companies. Now, Will the Platforms Obey Them?. Denver Business Journal. Accessed September 2022.
  11. Grubhub, Uber Eats, Postmates Must Face Diners' Lawsuit Over U.S. Restaurant Prices. Reuters. Accessed September 2022.
  12. Chicago Sues Grubhub and DoorDash for Allegedly Scamming Basically Everyone: Restaurants, Drivers, and Customers. Eater. Accessed September 2022.
  13. Grubhub Class Action Claims Company Deceives Customers, Restaurants in Several Schemes. Top Class Actions. Accessed September 2022.