In most of the country, conversations about aggregator fee caps, so front-of-mind for those in the restaurant industry throughout the first year of the pandemic, have more or less faded to the background. Now, however, Washington, D.C., Attorney General Karl Racine is resurfacing the issue, with the District of Columbia suing Grubhub for alleged misleading claims.
The allegations concern a promotion that promised to help restaurants, the Associated Press reported Monday (March 21), one in which consumers were offered $10 off orders of $30 or more but were not made aware that restaurants were bearing the cost of this promotion. Additionally, the suit accuses Grubhub of hiding its additional fees and of deceiving customers by not making it clear that menu prices may be higher than they are through restaurants’ direct channels, among other alleged violations.
“We are seeking to force Grubhub to end its unlawful practices and be transparent so D.C. residents can make informed decisions about where to order food and how to support local businesses,” Racine said in a statement.
Grubhub maintains that it never said anything to give the impression that restaurants were not paying for the promotion and that its user terms disclose that menu prices may be different than they are through restaurants’ direct channels.
“We will aggressively defend our business in court and look forward to continuing to serve D.C. restaurants and diners,” Grubhub said in a statement.
In December 2020, Racine sent leading aggregator DoorDash a cease-and-desist letter warning that the company’s premium service could be in violation of 15% fee caps, and in November 2019, he sued DoorDash over alleged deceptive tipping practices.
Related news: DC AG Is Suing DoorDash Over Tipping
“We strongly disagree with and are disappointed by the action taken today,” a DoorDash spokesperson said at the time.
A significant share of consumers are using aggregators, according to findings from the December 2021 edition of PYMNTS’ Digital Divide report, The Digital Divide: Delivery Service Aggregators And The Digital Shift, created in collaboration with Software-as-a-Service (SaaS) customer experience management (CXM) solutions provider Paytronix.
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The study, which drew from a survey of a census-balanced panel of more than 2,500 United States consumers conducted in late October, found that 42% of all consumers had used a restaurant aggregator in the previous 18 months. Additionally, findings showed that 54% of those aggregator users had used DoorDash, 52% had used Uber Eats and 38% had used Grubhub.
However, fees are influencing consumers’ choice of ordering platforms, often sending consumers to restaurants’ direct ordering channels instead, according to research from PYMNTS’ October 2021 report The Digital Divide, Aggregators: The Cost Of Convenience, created in collaboration with Paytronix, which drew from a census-balanced survey of more than 2,200 U.S. adults conducted in September. The study found that 53% of those who do not use aggregators cite cost-related concerns as a reason for steering clear.
Read the full report: Digital Divide, Aggregators: The Cost of Convenience
“People do try to order direct from restaurants because they understand the fees that are being taken by the different aggregators, and so we’ll see that in their search behavior,” Paytronix CEO Andrew Robbins told PYMNTS’ Karen Webster in a PYMNTS TV interview. “They’re trying to buy direct.”
Read more: Restaurants Lean on Loyal Customers to Navigate Omicron, Inflation Impact
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