Grubhub announces initiatives in response to restaurant complaints

Grubhub has heard the industry's grievances.

In a new blog post, the delivery service outlines a new policy on examining phone orders, a website created to streamline the process for restaurants to request control over URLs and a series of round tables to foster dialogue between Grubhub and restaurants.

"We 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, the company wrote in a blog post announcing the initiatives on Thursday.

Schumer has weighed in on restaurant delivery before.

“Grubhub’s announcement today is a productive and positive step in addressing the issues. We look forward to continuing to work with the New York State Restaurant Association, the New York City Hospitality Alliance, and others to achieve more progress as this plan unfolds,” a spokesperson for Schumer wrote in a statement when asked about his recent work with Grubhub.

"We remain committed to maintaining a beneficial relationship with everyone who uses our service,” Grubhub writes.

“That's why, in addition to helping restaurants grow and thrive, we have always championed our drivers — providing them with 100% of their tips — and offered the industry's most transparent fee structure for diners."

The blog post is in response to a bout of negative press, including accusations of inaccurate fees on phone charges and fake websites and a New York City council hearing on restaurant delivery that got heated.

Andrew Rigie, the executive director of the New York City Hospitality Alliance believes there's more work to do.

"While Grubhub's announcement is a step in the right direction, it is a small step, and much more must be done," he wrote in a statement. "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."

New York City Councilmember Mark Gjonaj, who chairs the small business committee, and organized the hearing and subsequent oversight inquiry also see's the annoucements as "insufficient." 

"The Committee will continue working with GrubHub and all other stakeholders to help ensure a fair and level playing field for New York’s locally owned restaurants. With that said, the Committee sees very little in today’s announcement that will impact our recently launched oversight inquiry," Gjonaj wrote in a statement. 

Grubhub was the target of a class-action lawsuit filed by a restaurant operator who claimed the delivery service charged restaurants for calls made through the app, even when they didn't result in orders. One issue discussed during the council hearing is that restaurants could not view charges made more than 60 days prior to identify if false charges had been made. 

In response, Grubhub is extending the "look-back" period for restaurants to review all phone orders from 60 to 120 days. And the company noted that they "will redouble our efforts to continuously improve processes we use with regard to phone orders." In a phone call, Brendan Lewis, the VP of communications for Grubhub, stressed that the company did not charge for all phone calls over 45 seconds as had been reported. The process to review charges, though, remains the same for now. And it's a process that Rigie argues is "extremely time-consuming" and "should not be on restaurants."

Rigie and Gjonaj both argue that the "look back" period should go back further. "There is no doubt that many restaurants on GrubHub’s platform have paid these erroneous charges for years," Gjonaj wrote. "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."

Grubhub also announced the creation of a website "that makes it even easier for restaurants to request direct control of any URLs registered or microsites created as part of their contractual relationship with Grubhub."

The policy of creating such sites was discontinued around 2017, noted Lewis. Before this time a standard Grubhub contract included this language: "GH may create, maintain and operate a microsite (MS) and obtain the URL for such MS on Restaurant's behalf, which Restaurant grants GH the right to do."

"The world that we operated in even five years ago was much different for people to set up websites," said Lewis explaining why the policy was in place. Today, it's easier for restaurants to build their own website.

The uproar over these Grubhub created websites brought up a larger issue for restaurants—losing control of their online presence and customer data as they become more reliant on third-party companies. While the site set up by Grubhub should easily transfer a URL to a restaurant customer, consumer data remains with Grubhub.

The final initiative outlined in the Grubhub post is a series of restaurant roundtables "as part of our commitment to foster more direct dialogue with our restaurant partners." The first roundtable should occur within the next month and will take place in New York in conjunction with the New York State Restaurant Association and members of the City Council and the Department of Small Business Services in New York will be invited.

“Our belief is that education is paramount when running a successful business and that is why the NYS Restaurant Association is partnering with the team over at Grubhub on a series of restaurant roundtables,” a NYSRA representative wrote in a statement.

“There has been a lot of confusion in the third-party delivery space, specifically over some of the practices that companies have adopted and it’s important that both sides are meeting face to face to ensure a positive working relationship. The NYS Restaurant Association is happy, and excited, to play a part in making these overdue conversations happen.”

But Rigie of the New York City Hospitality Alliance remains unconvienced. "Because Grubhub didn't announce additional reforms of their business practices, we should be very skeptical that these roundtables are not used as a publicity stunt to use restaurants as pawns and distract from the fact that they are not making more meaningful changes," he wrote.

The blog post ended with a call to other delivery services to audit their practices, echoing Grubhub CEO's statements he made during the company's earnings call earlier this week on transparency in fees and pricing.

"We invite others within the industry to examine their own practices through that same lens of transparency — for the benefit of all of our restaurants, diners, and drivers."

Contact Gloria Dawson at [email protected]

Follow her on Twitter: @GloriaDawson

Update, Aug. 1, 2019: This post has been updated with statements from Andrew Regie of the NYC Hospitality Alliance and from New York City Councilmember Mark Gjonaj and with a statement from Senator Chuck Schumer's office.