Grubhub Says It Didn’t Create Fake Websites Without Restaurants’ Permission

In the days since the New Food Economy published a report alleging that Grubhub and its subsidiary Seamless have been quietly buying up more than 23,000 web domains in restaurants’ names without their knowledge or permission, the food ordering and delivery service has faced public outrage. Many accuse the company of engaging in predatory cybersquatting that competes directly with restaurant-owned websites, and of preventing restaurant owners without sites from building their own web presences from scratch.

Grubhub denied the allegations after the report was published on Friday, claiming that “Grubhub has never cybersquatted,” that the Grubhub-owned web domains were registered on restaurants’ behalf per their contracts and transferred over to restaurants “as soon as they request it,” and that the service is no longer provided. The company echoed those refutations on Tuesday in an email sent to employees that was obtained by the Los Angeles Times. In the email, CEO Matt Maloney contended that the allegations are “outright false” and that “those spreading false narratives are being reckless.” Per the LA Times:

“We do not set up websites without the permission of a restaurant,” Maloney wrote in the email to employees. “We had a very clear provision in every one of our restaurant contracts saying we would provide this service to bring them more orders.”

Maloney also said GrubHub, which discontinued the practice of automatically creating websites for restaurants in 2018, charged restaurants less for orders received via those websites than for those placed directly within its app, and turned ownership of the websites over to the restaurants upon their request.

Contract language obtained by the LA Times does seem to support at least one of Maloney’s claims: the second item in terms-of-service agreements signed by restaurant owners states that Grubhub “may create, maintain and operate a microsite (“MS”) and obtain the URL for such MS on restaurant’s behalf,” according to the Times.

Even so, it’s not a flattering look for Grubhub that the company buried this clause within the contract while failing to communicate its existence — and the ability to transfer ownership of the Grubhub-created websites — to restaurant owners. One proprietor interviewed by the Times said that a microsite created in her restaurant’s name displayed a photo of the wrong food and listed the wrong location; another owner interviewed by the New Food Economy does not even currently work with Grubhub, and yet the company created a microsite with his restaurant’s name.

In some cases, these Grubhub-owned sites might “win” in search results, leading those searching for a restaurant to accidentally stumble upon the Grubhub-owned versions and order off a website within its commission fee structure. One Long Beach, California, restaurant, Mosher’s Gourmet Deli, currently has its own website listed fifth in search results; two spots above it is Grubhub’s app page, and two spots below it is the “shadow” website that only links back to Grubhub.

The websites, which all share similar generic design templates, also display the same, Grub-specific phone numbers used in Grubhub’s app. Each call placed through those app phone numbers is recorded by the platform and earns the company a commission fee on every order, skimmed off the restaurant’s revenue.

While it isn’t the first time a delivery service has done this, Grubhub was already in hot water before this report surfaced. More and more restaurant owners have contended that third-party ordering and delivery services like Grubhub charge businesses excessively high fees that eat into already thin margins, and several restaurant owners filed a class-action lawsuit accusing Grubhub of charging them up to hundreds of dollars in additional fees for phone calls placed through the app that are not explicitly food orders.

This post has been updated to reflect Grubhub CEO Matt Maloney’s email to employees, as well as language the the contracts signed by restaurant owners, as reported by the LA Times.

• GrubHub is buying up thousands of restaurant web addresses. That means Mom and Pop can’t own their slice of the internet [The New Food Economy]
• Facing fury over ‘fake websites,’ GrubHub says restaurants have it all wrong [LA Times]