Massachusetts Attorney General Maura Healey accused GrubHub of charging restaurants more than permitted during the COVID-19 pandemic.
The online delivery service allegedly violated the regulation that prohibited third-party delivery service platforms from charging fees that surpass 15% of an order's menu price. The state alleges this cost already struggling restaurants thousands of dollars during a time of economic uncertainty.
According to Newsweek, “The caps were put in place during the Covid-19 pandemic and sought to help strained businesses. They were in effect between January 14, 2021, and June 15, 2021, expiring when the state lifted its Covid-19 state of emergency.”
In court documents, Massachusetts claims the company "tacked on an additional 3% or more for 'collecting payments, fraud monitoring, customer care,' effectively charging restaurants at least 18%," per WBUR.
In a statement regarding the lawsuit, Healey said, “We are suing to get money back to these establishments and to hold GrubHub accountable for its unlawful conduct. Our restaurants have been hard hit by this pandemic and we will do everything we can to help get them the relief they need to recover."
GrubHub was sent a cease and desist letter in May, says CBS Boston, which ordered them to stop charging “covered establishment fees in excess of 15 percent of the menu price of the online order”
Lockdowns and social distancing requirements mandated in the wake of COVID-19 crushed the restaurant industry, especially independent places. Food delivery was regarded as a safer option and, in some places, the only way for restaurants to reach their customers. Accordingly, companies like GrubHub, DoorDash, and UberEats thrived during 2020.
In a statement last December, GrubHub “reported revenues of $504 million, which is a 48% year-over-year increase from $341 million in the same period last year. Gross Food Sales grew 52% year-over-year to $2.4 billion, up from $1.6 billion in the fourth quarter of 2019.”
The end-of-year financial summary noted that between October and December, an average of 658,100 people placed an order with GrubHub each day.
