August 30, 2021
Imagine that you own a neighborhood restaurant with a loyal base of customers.
It’s likely that you started offering delivery during the pandemic, when the state of Illinois required indoor dining to close, but maybe you chose to maintain your own website and hire your own trusted drivers so you could control the quality of the food arriving at your customers’ doors.
Fair enough, surely? Is not the right of a small-business owner to choose with whom to partner, and whom to avoid, a fundamental tenet of a free American marketplace?
Not in the dining and takeout business, apparently.
The notorious dining apps Grubhub and DoorDash, which also owns Caviar, not only sucked globs of revenue from struggling local restaurateurs during the pandemic, but they also targeted those who chose not to work with them by creating their own facsimiles of their menus and websites and delivering food from those restaurants anyway, raising the prices along the way for their own benefit.
Guess who got hurt if the order was wrong or the food was cold and diners complained?
Here’s a hint. Not the apps. The victims were the restaurants that had been slowly building their reputations for years, only for Big Tech to come in and ruin them in an instant.
History teaches us that Big Tech quickly moves on to the next fun thing to disrupt. Local businesses tend to stick with their communities.
Here in Chicago, we have long experience with protection rackets.
Take away the Silicon Valley-speak, and this one smells like a high-tech version of what the mobsters did here during the lucrative Prohibition era, when they created a whole variety of unsavory ways to ensure that everyone with whom they wanted to do business was willing to return the favor. On suitable terms. Suitable for one party.
The dining apps need ethical reform. For that reason alone, the city of Chicago was right to sue DoorDash and Grubhub on Friday in Cook County Circuit Court, with two separate lawsuits seeking “greater transparency and other key conduct modifications, restitution for restaurants and consumers hurt by these predatory tactics, and civil penalties for violations of the law.”
Mayor Lori Lightfoot was reportedly incensed at their behavior. We say, for good reason. And it’s right that a well-fed city that famously loves its takeout and delivery is leading the charge, especially since federal authorities have been slow to understand what has transpired.
The forced cooperation tactic is but one example of egregious behavior. The suit alleges that another novel scam — and let’s be frank here — involves Grubhub creating a fake phone number for a restaurant, manipulating search results so that the bogus phone number ranks higher than the eatery’s actual phone number, tempting people to call that number instead. Oh, they got through, since the line actually was forwarded on to the real McCoy. But when they did? The restaurant got dinged for fees, even though the customer likely intended to deal directly with their local business. They thought they were avoiding the apps, but the apps got them anyway.
We could go on. Anyone who has used DoorDash has seen that shameless “City of Chicago fee” on their bills. It was designed to look like a tax. In fact, it was the company’s response to the city’s attempt to limit fees. It simply thumbed its nose at the effort and made the impact on the customer even worse.
We’re well aware that this pernicious fee creep is not limited to dining apps. Anyone who has rented a car recently has marveled at the difference between the quoted daily rate and the final total, where many of those revenue-padding fees pretend to be mandatory charges. And, of course, the same usually applies to tickets for concerts and sporting events. Sometimes, this is a way to circumvent taxation, but mostly it’s all designed to make it harder for consumers to compare apples to apples in a free marketplace.
This issue of fee creep might not be new, but it’s gotten much worse over the last few months, especially as businesses under inflationary pressure look to raise prices without killing demand. It’s a consequence of the ever-increasing ease of comparative digital searching, and it’s designed to confound transparency.
The complete editorial can be accessed here.