Class action suit claims Waitr’s fee hike broke contracts

  • Little Rock-based Bobby’s Country Cookin’ has brought forth a class action lawsuit against Waitr, claiming the third-party delivery company broke its contract with thousands of eateries when it increased fees from 10% to 15%, according to Law360.
  • The suit alleges Waitr raised the fee in 2018 prior to its initial public offering and suggests the food delivery app unilaterally raised fees to maximize its revenues ahead of the securities sale, therefore breaching its contract. 
  • According to Law360, Waitr requires restaurants to agree to a pre-printed contract before they can join the network. The term is for one year, is auto-renewable and both parties must provide written notice at least 30 days prior to the end of the term if they don’t want to continue. The suit alleges that Waitr disregarded these agreements when announced the fee increase in an undated letter.

This specific complaint accuses Waitr of gleaning millions of unearned dollars to boost its appeal and value to investors prior to its IPO. Indeed — if these allegations are proven — a five-point increase in fees is a significant chunk of money to glean from restaurant partners. 

The suit will determine whether or not Waitr’s restaurant customers, many of whom are smaller operators, subsidized the company’s move to go public after Lancadia Holdings completed a $308 million acquisition of the firm. Since then, the food delivery company has experienced its share of legal turmoil. A collective action lawsuit was filed against Waitr in February alleging its employees were paid below the $7.25 federal minimum wage, while a month later, a similar suit was filed against the company. 

Waitr isn’t the only delivery app fending off such suits. DoorDash has been accused of tip theft for using worker tips to supplement their base wage in a February class action lawsuit. Also, in January, a class action lawsuit alleged that Grubhub charges restaurants for “sham” food orders over the phone. 

… If McDonald’s is facing challenges making money on Uber’s 10% take rate, then Waitr’s 15% fee is undoubtedly a much bigger hurdle. If the class action suit tips in the restaurants’ favor, it could further bolster leverage restaurants have with their third-party delivery partners. After all, those restaurants are the reason companies like Waitr exist in the first place and it’s best not to bite the hand that feeds you.

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