Facing fury over ‘fake websites,’ GrubHub says restaurants have it all wrong

After days of public furor over allegations of cybersquatting that hurts independent restaurants, GrubHub went on the offensive Tuesday. In an email obtained by The Times, Chief Executive Matt Maloney said the allegations were “outright false,” insisting restaurants using its food delivery platform had explicitly agreed to web domain purchases and the creation of websites advertising their businesses.

The outcry began Friday when the New Food Economy reported GrubHub had registered more than 23,000 web domains in restaurants’ names without their consent in what it cast as an attempt to generate greater commission revenue and prevent restaurants from building their own online presence.

“We do not set up websites without the permission of a restaurant,” Maloney wrote in the email to employees. “We had a very clear provision in every one of our restaurant contracts saying we would provide this service to bring them more orders.”

Maloney also said GrubHub, which discontinued the practice of automatically creating websites for restaurants in 2018, charged restaurants less for orders received via those websites than for those placed directly within its app, and turned ownership of the websites over to the restaurants upon their request.

“The allegations are untrue,” he wrote. “And those spreading false narratives are being reckless.”

Contract language obtained by The Times appears to support some of Maloney’s contentions. The second item in terms of service signed by restaurant owners states that GrubHub “may create, maintain and operate a microsite (“MS”) and obtain the URL for such MS on restaurant’s behalf.”

Yet pointing to the fine print is unlikely to silence all of GrubHub’s critics as its practices increasingly come under scrutiny amid accusations that it abuses its power as a middleman to impose costs that restaurants can ill afford, including commissions ranging from 13% to 30%.

Sharokina Shams of the California Restaurant Assn. said even if permission to create the microsites was given in GrubHub’s terms of service, the relative lack of communication and clarity on activity the company was undertaking on restaurants’ behalf is a problem.

“It seems like every time we hear from restaurateurs about their experience with third-party delivery services, words like ‘rip-off’ and ‘gouging’ come up,” said Shams.

Shams said that restaurant owners often tell her organization that they lose money on orders through GrubHub and similar services, but feel pressure to participate out of fear of losing new customers to competition.

“Now, to add insult to injury, we learn of these alleged ‘ghost’ websites and of charges to restaurants for orders that were never even placed. That’s unacceptable, and it’s something we’ll certainly be looking into further,” said Shams, in reference to recent lawsuits alleging that GrubHub charged restaurants thousands of dollars in commission for calls unrelated to food orders.

Oriett Mani, owner of Los Angeles cafe Citrus on Sunset, said she was unaware of the microsite that GrubHub had created in her restaurant’s name.

“This isn’t even my food,” said Mani, in reference to a large image of pancakes and bacon at the top of the microsite. “This location isn’t right either. I canceled this location with them months ago.”

Mani said that she generally didn’t have any issues in her relationship with GrubHub, but was trying to transition away from the platform due to the high commission fees.

“I’m trying to get all of the orders to go through me now,” said Mani. “They are giving me some business, but all that commission really adds up.”

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