GrubHub Wants to Own Foodservice Delivery

The Lempert Report
August 15, 2019

And many restaurants are upset

It seems like GrubHub is buying up domain names that are similar to a lot of their restaurant partners – as the restaurant owners are complaining about the flat fees and commissions that GrubHub keeps raising the rates on.

The New Food Economy has found that GrubHub has registered more than 23,000 web domains. Its subsidiary, Seamless, has registered thousands. Most of them appear to correlate with the names of real restaurants. 

Restaurateurs that The New Food Economy interviewed say they believe GrubHub purchased their restaurant’s web domain to prevent them from building their own online presence.  

Additionally, The New Food Economy writes, it appears GrubHub has set up several generic, templated pages that look like real restaurant websites but in fact link only to GrubHub. These pages also display phone numbers that GrubHub controls. The calls are forwarded to the restaurant, but the platform records each one and charges the restaurant a commission fee for every order, according to testimony from GrubHub executives at a hearing at New York City Hall. This happens on the GrubHub platform itself, too. The phone numbers you see displayed in the app typically aren’t a restaurant’s actual phone number, they’re the numbers that GrubHub uses to make sure it’s getting its commission. 

In that New York City hearing, company executives estimated that GrubHub made about $30 million in phone commissions last year. And those commissions are under increasing scrutiny. The New Food Economy says the company uses an algorithm to determine whether or not a phone call has resulted in an order, a system that results in mistakes. 

GrubHub has said it expects restaurants to log into its back end and listen to all phone recordings to make sure they aren’t being charged for calls that didn’t yield orders. A Philadelphia restaurant recently sued the company over its practices.  

In response to a detailed list of questions, from The New Food Economy,  GrubHub emailed the following statement: “Grubhub has never cybersquatted, which is identified by ICANN as ‘generally bad faith registration of another person’s trademark in a domain name.’ As a service to our restaurants, we have created microsites for them as another source of orders and to increase their online brand presence. Additionally, we have registered domains on their behalf, consistent with our restaurant contracts. We no longer provide that service and it has always been our practice to transfer the domain to the restaurant as soon as they request it.”