The city capped commissions on restaurant deliveries amid the pandemic, but it says the apps added new fees and marketed deceptive promotions.
THE PANDEMIC HAS been a boon to food-delivery apps, as many restaurants closed their dining rooms while diners were wary of going out. Lawsuits filed by the city of Chicago claim that DoorDash and Grubhub exploited the pandemic to mislead restaurants and diners, charge unfairly high commissions, and bypass emergency provisions meant to bolster the struggling hospitality industry. The apps used “unfair and deceptive tactics,” mayor Lori Lightfoot said in a press release.
The separate suits levy multiple charges against the companies, but the charges center around allegedly deceptive practices in the early stages of the pandemic when lockdowns shuttered many restaurants.
The suits allege that the companies took steps to avoid the city’s emergency fee cap, which limited the commissions on most orders to 15 percent. The suits claim Grubhub continued collecting fees larger than 15 percent, while DoorDash imposed an arbitrary “Chicago fee” to boost its revenue.
In separate statements, the companies called the suits “baseless” and said they plan to fight them in court.
The Grubhub suit claims the company used the pandemic to market a “save local restaurants” campaign that ultimately hurt struggling restaurants. The “Supper for Support” promotion offered $10 off orders from local restaurants of $30 or more; the suit describes it as a “losing deal for restaurants.”
The $10 was subtracted from the bill, but restaurants still had to pay a commission of up to 30 percent on the full price of the order; the campaign began months before Chicago capped commission fees. As a result, the suit says, a $30 order would net only $11 in revenue for a restaurant. The suit alleges that if diners knew how much went to the platforms, as opposed to the restaurants, they wouldn’t use them to order.
The complete article can be accessed here.