DoorDash Sues Software Partner Olo Over Excess Fees

Delivery service DoorDash is suing business partner Olo, accusing the software provider of overcharging it by millions of dollars for several years. Olo had acknowledged in a legal filing ahead of its initial public offering of stock that DoorDash was seeking “damages in excess of $7 million,” the Financial Times reported.  

Olo’s software allows for ordering on a range of digital channels, and also manages the delivery of food as well as restaurants’ online presence. The company went public on the New York Stock Exchange on March 17.  The IPO took place as eCommerce and food delivery have boomed during the pandemic. In its filing before the IPO, the company said that this leap forward for eCommerce will remain even after the pandemic is over. 

Olo charges a fee to the delivery companies for each order it processes. DoorDash said that its contract with Olo stipulated that it would not be charged more than other delivery companies, the FT reported. However, DoorDash said it discovered a discrepancy when it acquired rival delivery company Caviar in 2019. The fees that Olo charged Caviar were “significantly lower” than what DoorDash was charged, the delivery company said, adding that it would have paid at least $7 million less if offered the same rate. As a result, DoorDash is accusing Olo of committing fraud over their 2017 contract. 

Olo filed legal documents in the New York State Supreme Court on Tuesday (March 30). DoorDash said it is “seeking punitive damages for fraudulent concealment and fraudulent inducement,” the FT reported. 

DoorDash charged that “to maximize revenues for its IPO, Olo cheated its largest business partner.” Meanwhile, Olo had pledged that the fees it charged DoorDash “would never be higher than the fees charged to any other delivery platform provider.”