DoorDash drops fraud lawsuit against Olo

Joanna Fantozzi

Third-party delivery company DoorDash and b2b software company Olo have reached an agreement after DoorDash filed a lawsuit against the company last month, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

Although DoorDash originally sought upwards of $7 million in damages, the agreed upon settlement instead requires Olo to issue a letter of credit of $25 million to DoorDash. Both companies have also agreed to settle and dismiss DoorDash’s legal claims. Olo’s letter of credit will “guarantee any unpaid and owed amounts” under the companies’ new agreement, according to the SEC filing.

DoorDash’s original lawsuit, filed with the New York State Supreme Court on March 31, accused Olo of fraudulently charging them higher fees than their competitors, a claim that was discovered last year when the company acquired former competitor Caviar and noted that their delivery fees were “significantly lower” than DoorDash’s.

Although DoorDash originally sought upwards of $7 million in damages, the agreed upon settlement instead requires Olo to issue a letter of credit of $25 million to DoorDash. Both companies have also entered a new agreement, replacing their previous 2017 contract, which DoorDash claims had been breached. The terms of the new contact will continue for three years through April 2024, with the option to renew for a fourth year.

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“We are pleased to have resolved this matter and continue to work together for the benefit of our merchants,” Tom Pickett, Chief Revenue Officer of DoorDash said in a statement.

The new contract will allow both companies to continue to “work together on products and features to unlock value for both parties and their shared merchant base,” the statement said.

“Today’s announcement of a multi-year collaboration with DoorDash reflects our commitment to best serve the restaurant industry,” Marty Hahnfeld, Chief Customer Officer of Olo said in a statement. “We look forward to our continued partnership over the years ahead.”

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