Chicago Sues Grubhub and DoorDash for Deceptive Practices

“As we stared down a global pandemic that shuttered businesses and drove people indoors, the defendants’ meal delivery service apps became a primary way for people to feed themselves and their families, as well as support local restaurants,” Mayor Lori Lightfoot said in a news release. “It is deeply concerning and unfortunate that these companies broke the law during these incredibly difficult times, using unfair and deceptive tactics to take advantage of restaurants and consumers who were struggling to stay afloat.”

The complaints allege both services advertised delivery from unaffiliated restaurants without their consent, lured consumers with deceptively low delivery fees upfront that increased up to sixfold at the end of the transaction, and priced menu items up to 25% higher on Grubhub and up to 58% higher on DoorDash.

Last year, approximately half of Chicago’s 7,500 restaurants closed either temporarily or permanently during the pandemic, the city said. But food delivery services thrived as customers under statewide stay-at-home orders ordered in. The city alleges DoorDash and Grubhub ramped up their “predatory tactics” during the pandemic.

Chicago-based Grubhub, a food delivery pioneer when it launched in 2004, was acquired in June by Amsterdam-based Just Eat Takeaway in a $7.3 billion all-stock transaction. The lawsuit alleges Grubhub “exploited restaurants and the goodwill of consumers” during the pandemic through promotional campaigns such as “Supper for Support,” which billed itself as a bid to save local restaurants but forced restaurants to foot the bill for a $10 off coupon.

“Grubhub deceptively portrayed Supper for Support as a win-win proposition for consumers and the restaurant,” the lawsuit alleges. “As the math makes clear, Supper for Support resulted in extraordinary support for Grubhub but not for struggling local restaurants.”

The lawsuit also alleges Grubhub violated the city’s emergency cap of 15% on restaurant commissions during the pandemic.

On Friday, Grubhub denied it violated the cap, as well as every other allegation in the lawsuit.

“We are deeply disappointed by Mayor Lightfoot’s decision to file this baseless lawsuit,” Grubhub spokesman Grant Klinzman said in an emailed statement. “Every single allegation is categorically wrong and we will aggressively defend our business practices. We look forward to responding in court and are confident we will prevail.”

California-based DoorDash, the nation’s largest food delivery service, also refuted the allegations and called the city’s lawsuit “baseless” and a “waste of taxpayer resources.”

“DoorDash has stood with the City of Chicago throughout the pandemic, waiving fees for restaurants, providing $500,000 in direct grants, creating strong earning opportunities, and delivering food and other necessities to communities in need,” DoorDash spokesman Taylor Bennett said in an emailed statement. “This lawsuit will cost taxpayers and deliver nothing.”

DoorDash added the $1.50 Chicago Fee to orders within the city limits after the 15% commission cap was imposed. The Chicago Fee was dropped in April when the cap was removed, but is once again being added to orders after the city reinstated the 15% limit in June, the company said.

The company said Friday the Chicago Fee is necessary to cover delivery costs while commission caps are in place.

The Chicago Fee “misleadingly conveyed to consumers that the City was imposing this fee and receiving the money,” the city alleges in its lawsuit.

The lawsuits seek to prohibit Grubhub and DoorDash from engaging in further deceptive practices, fines of up to $10,000 for each violation and restitution for restaurants and customers allegedly hurt by their actions.

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