CNY restaurant fights back against Grubhub’s unauthorized deliveries: They’re illegal, owners charge
Watertown, NY – A family-owned Italian restaurant is suing Grubhub in Upstate federal court over the caterer’s controversial practice of adding restaurants to its online platform without their knowledge or consent.
It’s a dirty secret within Grubhub’s business strategy: when a restaurant turns down an official business partnership, Grubhub simply adds the restaurant’s menu to its portfolio and sends delivery workers to collect food like the general public.
But many of the estimated 150,000 restaurants listed on Grubhub without their consent say this is basically theft. And now Pete’s Trattoria in Watertown has given that claim a legal name: Trademark Infringement.
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“Pete’s has been in business for decades without interruption … it has invested a lot of time, money and other resources in connection … with Pete’s various brands, logos and names,” the lawsuit reads. “Plaintiff’s trademarks each serve as a clear indication of Pete’s quality, reputation and goodwill in the marketplace.”
Grubhub’s unauthorized use of Pete’s name and menu for its delivery business threatens to ruin Pete’s reputation, the lawsuit said.
“The plaintiff cannot control how the defendant takes care of his groceries, ensures that the orders are correct or that the delivery is made on time,” says the lawsuit.
Suing Grubhub for trademark infringement is a novel approach in local courts, but it’s gaining traction as restaurants everywhere grapple with Grubhub’s clumsy tactics.
And it works.
Pete’s Watertown attorney David Antonucci says Grubhub removed the restaurant from its list since legal action was taken earlier this year. For now, the restaurant is still tracking money for past damage.
This is hardly the only trademark infringement against Grubhub. Two national class actions bring Grubhub to account for different complaints.
The first complaint filed concerns an almost opposite complaint than Pete’s: Grubhub lists a restaurant that does not wish to partner as closed and / or unavailable for online orders. Grubhub has agreed to resolve this initial lawsuit by giving non-affiliates more control over their listings on Grubhub, including the ability to request the listing’s complete removal.
The second national lawsuit is similar to Pete’s, telling Grubhub to remove restaurants that don’t want to work with them.
Grubhub made it clear in the first class action lawsuit that it was not intended to deny the trademark infringement allegation. Instead, Grubhub told a judge it was interested in settling these cases. It is discussed whether money will be paid out and how many restaurants will be included.
The second class action lawsuit aimed at preventing Grubhub from adding non-partner restaurants is still pending. Lawyers discuss what action to take in light of the settlement in the first class action lawsuit.
Antonucci, Pete’s attorney, said he had decided against participating in the second class action lawsuit and was instead negotiating with Grubhub alone.
But he credits the national lawsuit for providing an overview of Grubhub’s practices.
Since its inception in 2004, the delivery website had partnered with restaurants that wanted to play ball.
However, increasing competition resulted in a fall in Grubhub’s stock assets in the fall of 2019, according to the federal class action lawsuit in Illinois. In response, Grubhub made aggressive efforts to expand its restaurant portfolio, the lawsuit said.
Instead of waiting to enter into business partnerships, Grubhub added 150,000 new restaurants to its service in three months without first obtaining approval, the lawsuit continues. That turned out to be “very lucrative”.
Grubhub implicitly confirmed this strategy to Syracuse.com | The Post-Standard in March said that it is “placing restaurants on our platform in order to offer guests variety and to generate more orders for the restaurants”. They hope to partner with these restaurants (and collect commissions) later.
However, local restaurateurs say this on-site approach causes myriad of problems while Grubhub has no incentive to do things right.
Perhaps the biggest complaint is that Grubhub finds and publishes outdated menus, opening times, and other information for non-partner restaurants. Some of this information is years old and includes no longer existing business hours, discontinued groceries, and no longer valid prices. The restaurant, not Grubhub, is blamed for such mistakes, restaurateurs say.
The class action lawsuit describes a wide range of other reasons why restaurants don’t partner with Grubhub:
Customers blame restaurants for poor service from Grubhub. If an order is delivered cold or with the wrong food, the restaurant will be blamed, even if the Grubhub supplier is at fault. Customers assume that Grubhub has the blessings of the restaurant.
Some restaurants do not want the extra orders. Popular local restaurants don’t need additional business. Their business plan does not provide for additional capacity to carry out Grubhub jobs without disrupting normal operations, overloading staff, or compromising quality.
You don’t want to lose control of customer service. With Grubhub taking care of the ordering and delivery, restaurants are relinquishing significant control over the customer experience. For some, it’s not worth the extra business.
Grubhub employees are sometimes late or unprofessional. If delivery agents arrive late, the food may be delivered cold or stale. Drivers can “stack” orders, which means they wait until they pick up several orders at the same time and leave some of the food outside for a long time. Grubhub drivers can also sometimes cause their own problems by being unprofessional or committing petty crimes.
Too many canceled orders or customer refunds. Grubhub makes it easy to cancel orders. But these canceled orders can cost restaurants a lot of food and money. Some restaurants have complained that Grubhub is issuing refunds without contacting the restaurant to see if there is a guarantee.
Some restaurants do not want takeaway or delivery services. Certain restaurants, especially those that specialize in fresh food, may not want a take-home business.
Want tips to go to restaurant staff. When ordering food via Grubhub, tips are given to the company and its drivers.
Some restaurants have their own delivery services. Restaurants that want to control quality and customer service have their own delivery services.
Restaurants partner with a competitor to Grubhub. Restaurants looking to work together for takeout will shop around to find the best deal among delivery providers. These restaurants don’t want or need Grubhub’s services.
Grubhub makes too much profit. This became a problem locally when delivery services charged exorbitant fees during the Covid-19 pandemic. But Grubhub can accept more than 30% of the total order amount, leaving the restaurants under water when they sell.