The New York City Council said the attempt the updated practices wouldn’t impact its inquiry.

By Mike Pomranz
August 02, 2019
Grubhub

Whether you own a restaurant or not, the optics didn't look good for Grubhub. Earlier this year, America's now second-largest online delivery platform came under fire from restaurants they work with over a number of grievances, including controversial fees (many of which are being reversed and have led to an ongoing class-action suit) and websites made on restaurants' behalf. The New York City Council even brought the company in as part of a hearing on the impact of restaurant delivery services. It's not as though Grubhub is alone in these kinds of controversies. The explosive growth of delivery apps has come with plenty of growing pains across the industry. For instance, the country's largest service, DoorDash, just came under fire for its tipping policy, forcing the CEO to promise changes. Now, it's Grubhub's turn.

In an update to its restaurant partners posted to Grubhub's learning center, the company — which emphasizes that it "is committed to transparency and to being the best partner for restaurants" — laid out a three point plan billed as "enhancements to how we work with restaurants" that they hope will "help bring clarity to larger issues facing our industry." They include, one, "extending the look-back period for restaurants to review all phone orders from 60 to 120 days" — a move attempting to address the aforementioned fee dispute. Two, the company states "we will deploy a website that makes it even easier for restaurants to request direct control of any URLs registered or microsites" — which addresses the website issue.

Finally, three, Grubhub writes, "we will set up a series of restaurant roundtables as part of our commitment to foster more direct dialogue with our restaurant partners. Our initial focus will be in New York and in conjunction with the New York State Restaurant Association. In New York City, we will invite members of the City Council and the Department of Small Business Services to attend and seek their help to make these sessions as productive as possible." The company then mentions that they "are pursuing these actions following constructive feedback from restaurants, diners, drivers, and elected officials, including Senator Charles Schumer, whose staff helped us come up with this roadmap."

And yet, as should probably be expected, Grubhub immediately received feedback that these changes do not go far enough. "While I appreciate GrubHub's commitment to keep an open dialogue about the Committee's concerns, the recently announced policy change to extend the ‘look back' period on phone order charges from two months to four months is insufficient," NYC Councilman Mark Gjonaj, chair of the Small Business Committee, said in an emailed statement. "There is no doubt that many restaurants on GrubHub's platform have paid these erroneous charges for years. Since these charges should not have been collected in the first place, I encourage the company to extend the refund period to the beginning of each contract." He later added, "The Committee sees very little in today's announcement that will impact our recently launched oversight inquiry."

Andrew Rigie, the executive director of the New York City Hospitality Alliance, struck a similar tone. "While Grubhub's announcement is a step in the right direction, it is a small step, and much more must be done," he stated according to Nation's Restaurant News. "Their announcement does not even address the major complaint from so many restaurants, which is that their fees have continued to go up as they dominated the market."

Interestingly enough, Grubhub seems to inadvertently hint at the larger problem in their own update. Though these delivery apps are often still seen as "startups" — or at least new companies in a still-developing industry — Grubhub admits that it has been at this for "20 years" resulting in "billions of dollars in orders" while working with "the 125,000 restaurants and the 20 million active diners on our platform." Grubhub is a public company currently worth over $6 billion. And yet, as the NYC Council itself somewhat bragged, the hearing they held was billed as a "first in the nation." Taking in that larger picture, it would seem that as fresh as the online delivery business may seem, in many ways, this whole conversation is actually long overdue.

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