The epidemic has once The gospel of food delivery apps, Because many restaurants are closed, and diners are afraid to go out.The lawsuit filed by the City of Chicago claims Dash with Grub Use the pandemic to mislead restaurants and diners, charge unfairly high commissions, and bypass emergency regulations designed to support the troubled hotel industry. Mayor Lori Lightfoot said in a press release that these apps use “unfair and deceptive tactics.”
Separate lawsuits brought multiple allegations against these companies, but the allegations were concentrated in the early stages of the pandemic, when many restaurants were blocked and closed.
The lawsuit alleges that these companies took steps to avoid the city’s emergency fee cap, which limits commissions on most orders to 15%. The lawsuit alleges that Grubhub continues to charge more than 15% of fees, while DoorDash charges arbitrary “Chicago fees” to increase revenue.
In separate statements, the two companies called the lawsuits “baseless” and stated that they plan to fight them in court.
The Grubhub lawsuit alleges that the company used the pandemic to promote “saving local restaurants” activities that ultimately harmed the troubled restaurants. The “Supper for Support” promotion offers a $10 discount for orders of $30 or more in local restaurants; the lawsuit describes it as a “failed restaurant transaction.”
$10 is deducted from the bill, but the restaurant still needs to pay a commission of 30% of the full price of the order; the event started a few months before Chicago’s commission was restricted. Therefore, the lawsuit alleges that a $30 order can only generate $11 in revenue for the restaurant. The lawsuit stated that if diners knew how much to go to the platform instead of the restaurant, they would not use them to order.
A Grubhub spokesperson stated that participating restaurants agreed to join the promotion and understand these terms before signing. Participating restaurants are told that they will conduct promotions as part of the event; restaurants that refuse will miss additional promotions offered to competitors.
“That’s just a spin,” said Pat Doerr, managing director of the Chicago Hotel Association. He said he heard from multiple owners that they said marketing related to the pandemic was not helpful. “These apps have spent millions of dollars telling customers that they are the best way to order food online. This fee is ultimately paid by locally owned bars and restaurants, and they cannot afford it.”
Grubhub owns the Seamless and MenuPages platforms, and DoorDash also runs Caviar. All platforms are named in the lawsuit.
Chicago is one of several cities that limit how much apps such as DoorDash and Grubhub can charge restaurants. Usually, when diners use the app to order food, the platform will charge the restaurant up to 30% of the order as a commission. This hurt many restaurants during the pandemic because many of their orders came from online platforms.
In November, Chicago limited the commission for most orders to 15%, and Grubhub insisted on this move UnconstitutionalThe city’s lawsuit alleges that despite the law, Grubhub’s other expenses — marketing, delivery, order processing — exceeded 15%.
One month after the cap took effect, DoorDash issued a “Chicago Fee”, which charged a fixed fee of $1.50 for all orders in the city. The complaint alleges that the fee ended in July, misleading customers to believe that the fee was collected by the city government rather than DoorDash itself. This also pushed DoorDash’s commissions by more than 15%. In addition, the lawsuit alleges that DoorDash added fees to restaurant chains such as McDonald’s and Taco Bell, even though the 15% cap does not apply to them.
The lawsuit also claimed that these apps included restaurants in their services without the restaurant’s permission.The complaint alleges that DoorDash “misappropriated [a restaurant’s] Names, menus, and other information to create lists without permission”, and Grubhub’s “Unauthorized lists convey a non-existent business affiliation…”.