Grubhub ‘cybersquatting’ outcry signals industrywide delivery tensions

Accusations of hidden fees and buying restaurant domains without permission highlight a need for clearer communication between third-party providers and restaurants.

Despite growing demand for delivery, operators have become increasingly concerned that third-party platforms are taking too big a bite out of their already thin margins.

Late June, independent operators took aim at Grubhub specifically, accusing the third-party provider of cybersquatting and registering 23,000 domain names without their permission to profit off of restaurant’s businesses. A recent New York City Council meeting also examined accusations of hidden fees imposed by Uber Eats and Grubhub whencustomer phone calls didn’t result in orders

Scrutiny over third-party aggregators will likely intensify, especially as delivery’s growth outpaces overall restaurant industry sales, and operators work out the kinks with delivery. Non-pizza delivery increased 63% in the last five years ending March 2019, NPD Group Vice President, Food Industry Advisor David Portalatin told Restaurant Dive. Comparatively, visits to restaurants have grown 1% during this time, he said. 

“Consumers are voting with their wallet and saying, ‘we value delivery’,” Portalatin said. 

As restaurants watch delivery sales grow, they also are seeing how much delivery providers are taking off the top from each transaction, Saleh said. 

“There is a prize out there and everyone is going to have to share in that prize,” Portalatin said. “Aggregators are going to have to have a revenue stream, too.”


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