Chicago sues Grubhub and DoorDash for allegedly deceptive practices | Hacker News Reader

Chicago sues Grubhub and DoorDash for allegedly deceptive practices

chicago.eater.com

104 pointsLarrikin54 comments

So I know this is not directly related to this lawsuit-- but, can someone with knowledge of the industry explain this to me?

I placed and order for pickup from "Custy's pizza" in Norco CA-- which if I understand correctly has been in business for at least 30 years.

I had ordered from GrubHub from there without incident several times before. I place my order and it proceeds through the normal order progression. It just happens to be an early evening where it is pouring rain-- very rare in my region of California.

When I arrive at the pizza shop-- the lights are off inside, and the door is chained.

After a few hours, GrubHub confirms I've picked up my pizza (I hadn't), and the transaction was complete.

I tried to dispute the transaction, but GrubHub kept closing the chat and then giving a cheery message about how I'd closed the support chat (I hadn't).

I have maybe used GrubHub once since. Ironically, that experience forced me to discover a pizza shop that was closer to my place that had much higher quality food and much better service (mostly staffed by locals).

What the heck happened here? How does an order process proceed through a restaurant that is closed and unmanned? I have to assume some sort of malfeasance.

Grubhub agents always do that to me too. It's absolutely infuriating.

Can you explain what a "Grubhub agent" is for reference?

A customer service agent who works for Grubhub.

I have literally never had a problem with grubhub support. Any time there is a problem, they are quick to throw vouchers at me which is fine.

I don't know what to tell you.

I literally said in the chat something to the effect of, "I was unable to pickup this order because the restaurant is closed." And I sent a picture of the restaurant with chains on the doors.

A couple mins later, I got kicked out of the chat and was unable to open a new one. I'm not saying GrubHub is evil or a scam or anything like that. I just don't understand, as an software engineer, how a fuckup of this magnitude could happen.

I think what must of happened is the restaurant closed unexpectedly, or was unable to find workers/supplies.

I'm not 100% sure but maybe that pizza place was also working with a ghost kitchen?

https://roaminghunger.com/blog/15623/ghost-kitchens-everythi...

Ghost kitchens still have employees working there. You would expect a few lights inside. Additionally, chaining the doors while employees are in there is... well, it is a bad decision for more than one reason. Besides the safety issues here, chaining employees inside your restaurant stinks of forced labor.

I think the argument was that the pizzas may have been prepared elsewhere in a ghost kitchen, not that the pizza restaurant location itself was a ghost kitchen.

not sure if it still works this way, but the restaurant devices for some delivery apps would auto-confirm orders after a timeout if they were ignored. i think the expectation was that if the staff wasn’t trained or wasn’t paying attention the worst that would happen is a driver would show up and talk to the staff which would prompt them to make the order. if the order ended up super late, the customer was expected to blame the restaurant and leave a bad review, or blame the delivery driver and rate them badly, and there would be no real fallout for the delivery company.

of course this was nonsense and just led to confusing situations like yours, frustrated and underpaid drivers, and spiteful behavior from restaurant employees.

> “.. the restaurant devices for some delivery apps would auto-confirm orders after a timeout if they were ignored.”

I know each platform has different settings in their tablets ( how restaurants primarily interact with the platforms). These have settings to help restaurants throttle orders. What I’m not sure about is auto-accept. Prolly each platform has something.

As to why a closed restaurant would be ‘open’ on the app when the doors are closed, it was the case during the pandemic that restaurant owners were making the difficult decisions to close their doors, and some were forgetting to close their online stores. Some would forget because they have only few platform sales, and others were forgetting because they have so many different platform systems they skipped turning one off.

I mean... isn't that basically fraud? I'd be demanding a full refund before I lawyer up :P haha

I'd just do a chargeback and never use that service again.

hey true, good call.

I get that Grubhub, DoorDash, and other industry players have created value but the I wish there was a white-label software stack that is easily administered by less technical people so the restaurants can take control back. I’m thinking something akin to a Wordpress 1-click install.

Apps like grub hub are very slick but the other end of the spectrum are terrible HTML pages that look like they were designed 20 years ago. There’s a wide gap and a lot if opportunity for something in the middle.

I don’t mind calling a restaurant direct. I would be happy with a simple menu and an easy to find phone number. I’m often weary of dark practices where GrubHub lists their own number, not the restaurants real number, and charges a commission or “finders fee.”

I would also be happy to see some kind of Apache-like or EFF-like nonprofit organization create an aggregator for the white-labeled software so there would only be 1 app to install and search on. Taking a much much lower cut.

Yeah I personally prefer businesses I can just call directly for delivery/pickup. If they know my number they know my order and payment info.

The trouble is not with the ease of development but the centralization and ease of finding the restaurant.

Marketplaces provide a one-stop location for customers, instead of searching Google then scrolling and clicking through each site to then get a 404 or poor website.

If you created a simple website it would need a whole bunch of work to get it to rank, get it added to Maps, Yelp etc. A well known marketplace/s provides everything for a very low cost in the long run.

This is not true and the opposite is actually true when it comes to ease of listing.

There are many restaurants listed on Yelp and maps that are unclaimed. They are both incentived to get as many businesses on as possible. As soon as the owner cares a little bit there is a straight forward method for claiming the listing and then the owner can set their hours and own website.

I personally don't waste my time helping massive companies for free by adding the listings but many people still do.

I also don't put any worth into Yelp or Google reviews and hate generalized way menus are displayed and find the "poor" websites do a far better job at highlighting the restaurants offering. I always immediately click the website link on either to actually determine if I want to go. Maps and Yelp only are useful for a localized search of places directly around me.

I feel like the real challenge isn't the software but the provision of delivery drivers. Before UberEats, there was a service in Australia called Menulog, did much the same thing but required restaurants to supply their own drivers.

It was dominated by the sorts of restaurants who already had drivers (pizza joints, chinese/indian places). There was very little uptake among places which didn't already have delivery organised.

Menulog still exists here in Australia, however it has adopted a combination of the system you describe and the third party driver system of Uber Eats et al. You can filter by restaurants that use their own drivers - I sometimes do this for two reasons, firstly it supports a driver who is directly employed and paid an award wage instead of this "contractor" bullshit, and secondly because restaurant employees have an additional incentive to get the delivery right (if they fuck it up, their boss will have a word with them and they will redeliver, any similar process for Uber Eats is far less direct).

In a way you are supporting larger businesses in detriment of smaller ones that don’t have the demand or cash flow to hire a driver, aren’t you?

Yes, that's true, however larger is relative when we're talking about pizza places and the local Chinese restaurant. These aren't national chains I'm talking about.

> I get that Grubhub, DoorDash, and other industry players have created value

In my opinion at least I think the premises of this is a bit questionable. A multi-billion dollar company employing an army of delivery contractors, just to satisfy the whims of some guy who really wants a burrito but doesn't want to get off his couch, all whilst burning VC and now stock investor money. I think its fair to argue that while streamlining the delivery process is definitely a positive, we could do without the large number of software programmers and contractors and capital, all of which could be employed somewhere else in the economy, which might in fact lead to more value creation.

Don't forget the point that most of the world was locked in their homes for a year (so disregarding the lazy man trope) and DoorDash had to rush to an IPO because even in this dream situation for a delivery company, they could barely make a profit and had to raise fees.

I totally agree. For now I often advise restaurants to use something like Square: https://squareup.com/help/gb/en/article/6612-set-up-your-onl...

GrubHub or Uber Eats are criminal when it comes to pickup orders. They'll take 25% or more of the money and steal your customer relationship. If you use something like Square you pay like 3% and keep the customer.

You nailed it — the primary value of these marketplaces is the consumer facing ordering technology, not the fact that it’s a marketplace.

This is an excerpt of a recent article that explains my thinking on it a bit better.

There is little (or even negative) value for restaurants from marketplaces in this industry. In many industries marketplaces like this make sense.

Typically, they make sense when discovery is very important, when there is little repeat usage of the discovered service or when there are multiple disparate services involved.

Travel is a good example here: it makes good sense for a consumer to use a marketplace to discover a hotel and a car rental company when they book a trip to a city they’ve never been to and likely won’t go to again for a few years.

And it makes sense for a hotel to list on a marketplace as it’s impractical for them to market directly to consumers from around the world in the off chance that they will visit the city the hotel is in.

There are very different dynamics at play in hospitality. People tend to order from two or three takeaways in rotation as opposed to discovering a new one each time they order.

They also tend to order from one located physically close to them, and they usually can be efficiently marketed to by this takeaway directly, both via offline methods such as walking past the store each day, getting flyers in the door, and online via search and brand marketing.

It is also rare that a consumer needs to make multiple purchases from separate services to order their food (they don’t, for example, usually need to order a taxi to collect the food after ordering it).

The value that restaurants get from joining a marketplace is the consumer-facing online ordering technology that they get access to, but not from the fact that they are getting it from a marketplace.

There is a lot of negative value for a restaurant in joining a marketplace (i.e., it causes them harm) as they end up sending their existing customer base away to a 3rd party who is incentivised to move the consumers away from that restaurant and over to one who will pay the marketplace more for the orders.

Disclaimer: I’m cofounder of flipdish.com that provides direct ordering tech to restaurants.

You nailed it — the primary value of these marketplaces is the consumer facing ordering technology, not the fact that it’s a marketplace.

You’re mistaken. The primary value is the logistics of dealing with drivers. A restaurant supplying its own drivers will always be at a disadvantage to Door Dash/Uber Eats etc because they can never utilize their drivers as efficiently as the big delivery companies. During peak hours, a restaurant may receive a surge of orders that they do not have the drivers to handle. During off-peak hours, on the other hand, they may not have any orders at all so any drivers they employ will be sitting idle, on call.

The marketplace for restaurants that everyone talks about is not the hard one to build. The hard one is the marketplace for drivers. If I’m a restaurant then there’s very little value to me in an app that takes orders but does not provide drivers.

The hole in this theory is that, unlike general delivery drivers, almost every restaurant's peak hours are at the same time - meaning that there's no reason to think that the app/website would have fewer idle drivers than the restaurants.

The primary value is the logistics of dealing with governments in order to abuse workers with impunity. If a restaurant tried to claim that their drivers were independent contractors that don't need to be paid between orders, they'd be laughed at. Put a massively funded, massively lobbying intermediary between the driver and the restaurant, and it becomes fine.

edit: I'm sure there's a term for this - labor-laundering?

My father drives for one of the big delivery apps. He does not consider it an abuse of his labour. The driver app offers him 4 hour shifts which he takes or rejects as he sees fit.

During his shifts he's essentially busy driving the entire time. Because the app has a big pool of drivers it is far better equipped to accommodate the shifting demand among the restaurants. As it turns out, not every restaurant does equally well on every day's peak hours. The delivery app acts as a load balancer by distributing drivers among restaurants according to demand.

My dad used to drive a limousine for a small, local business owner. He was verbally abused and often forced to drive clients to the airport at 4am one day and other clients to a rock concert at 3pm the next day. The owner also regularly stole his tips. He VASTLY prefers delivering food. He also has no interest in picking up a 9-5 job because he's older and he simply does not want to work more than 24-28 hours per week.

There’s definitely value in a shared driver pool but it does not need to come hand in hand with a consumer facing marketplace. Doordash offer access to their driver pool for orders placed through any channel (Doordash Drive), Uber offers on-demand drivers in a similar way. Companies like Stuart solely offer a B2B last mile delivery service with their pool of drivers.

This isn’t new either — DPD, UPS, DHL have all offered a shared delivery network (for retail) without anyone expecting that anything that is delivered by DHL must be ordered via DHL.com.

Google maps very often have menu photos for restaurant pages. We usually just pop the menu, find what we want and call the restaurant. It's often cheaper too and you know that all of your money is going to the restaurant.

I know of at least one clearly-garbage behavior, which is the “Taxes & Fees” category (initially hidden). Basically instead of saying something like “$7 DoorDash fee” they say “$5 DoorDash fee” and tucked under “Taxes & Fees” is another $2.

This kind of crap is why companies just aren’t trustworthy without reasonable regulation. They default to “trick the customer” every chance they get.

Google artificially inflates the prices when it proxies for postmates so ive taken to phoning the business directly and tipping employees directly rather than let thiry party skimmers abuse my community

I don't understand how people can tolerate a 50% markup to save 15-25 minutes of driving. Not only is the food marked up higher, but then they add the fees, the tips, etc. I'd rather just use that money saved to buy even more takeout later or at least make my order larger for leftovers.

My way around fees is to greatly increase what I order to dilute the fee, e.g. I might order 3-4 days of stuff.

Even before apps, e.g. back in the day when ATM fees kept increasing, I kept doubling the amount of cash I took out so that the fee change didn’t matter.

In general I think businesses count on most people not noticing or finding it too inconvenient to change behavior. Probably the same principle behind forcing people to spend hours on hold to make companies do things they don’t like, such as cancelling things.

> I don't understand how people can tolerate a 50% markup to save 15-25 minutes of driving

They probably don't. They probably don't realize that the food is marked up in addition to the fees.

I would imagine, most users look at the $5 fee, decide that's worth delivery, and assume the prices of the food are the same they'd be paying to the restaurant itself.

1.) a lot of my Uber Eats and DoorDash/GrubHub orders are via vouchers and gift cards given to me by businesses and vendors. It also has all the features to make expensing meals to a corporate account much easier. 2.) If I were a lawyer or freelancer billing at $400 or more per hour, I’d gladly pay the 50% markup to have my food personally delivered so I can keep working and making money. 3.) A 50% markup on a $12 dollar order is $6. There are many times I’d rather just spend $6 for the privilege of not interrupting whatever I’m doing — I personally value my time way higher than $6.

I tried Uber Eats once because I had a voucher. Even with the voucher, I didn’t save any money versus picking up myself and it took longer. The voucher pretty much went to the fees and tips.

It's all about how you value your time. That 50% markup is $7+ dollars. If you really don't feel like driving you might price your time close to however much you price your time at work.

If you're making minimum wage, your time is worth a few cents a minute, driving may be a good deal! If you're more highly paid and making ~$2/min post-tax 15 or more minutes may be "overpaying" in time, so paying for delivery makes perfect sense.

> At one point, DoorDash was using tips to subsidized [sic] wages for drivers, meaning employees wouldn’t earn more than their locked-in wages.

This is unbelievably dishonest.

Isn't it also illegal?

Disruptive.

One woman's "disruptive" is another woman's "illegal"

It's dishonest but it's also basically industry standard for food service, you only make tips above your wage after you subsidize your own wage, for example in my state NC: "In North Carolina, an employer MUST pay at least $2.13 an hour to tipped employees as long as each employee receives enough in tips to make up the difference between the wages paid and the minimum wage ($7.25)."

https://www.labor.nc.gov/workplace-rights/employee-rights-re...

Tipped Wage is a thing in 43 states: https://en.m.wikipedia.org/wiki/Tipped_wage#State_law

You know I always knew that a tipped job always had a base pay that was much lower than minimum wage. However I didn't know that the portion payed by the employer was subsidized by tips!

This is making me reflect on my own tipping tendencies...

> However I didn't know that the portion payed by the employer was subsidized by tips!

It's not, at least not legally.

What DoorDash did was basically the same as having a tipped minimum, on a per-delivery basis.

Basically, they promised a certain amount of money for each delivery, along with a minimum payment of $1. So if $1+tip was smaller than the promise, DoorDash made up the difference. If the tip was really big, then the driver would get exactly $1+tip.

The DoorDash UI prevented you from giving a "really big" tip. It topped off right at the point that drivers would actually start getting tipped in your math.

Over the years it's clear that tech companies are basically frauds and manipulative cheats just like others. They will do anything for profit.

If Grubhub/Doordash are misrepresenting themselves as having an affiliation with the restaurants that they do not then it is fraud and the restaurants are owed compensation.

I'd love to have a Door dash / Uber eats / GrubHub price comparison tool. This would probably do more than anything to drive process down.

Imagine if the city spent this energy on reducing the murder rate below 100 per month instead of suing companies for ideological reasons.

Believe it or not, governments or any organization or individual for that matter, can be pursuing more than one thing at a time.

And how is suing companies for fraud an ideological thing? And which ideology is that?

You do realise that the city would be having like multiple things tackling multiple issue right? Or do you think its just once person running here and there fixing issues?

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