You’re hungry, you’re lazy, and so you fire up your delivery app of choice and order in from a local spot you love. Simple, right? Not always. Increasingly, delivery companies are getting caught using predatory and automated tactics on diners and owners as part of their endless war for market share.
This weekend, Pim Techamuanvivit, owner of San Francisco-based Thai restaurant Kin Khao, took to Twitter to explain that her restaurant somehow ended up on online delivery platforms such as Seamless and Grubhub, despite having never offered delivery services. She explained that she received a call from a customer asking when his order from Seamless would arrive.
"I told him we've never been on it, not in our [entire] lifetime as Kin Khao,” Techamuanvivit wrote on Twitter. “He sounded really confused, so we said goodbye and I hung up. Then I got a little curious, so I went into the office and google "kin khao delivery", and guess what came up…"
Soon, she found that her restaurant was listed on both Grubhub and Seamless. But, while both sites had listings for her restaurant and accurate addresses, they featured incorrect menus listing items never offered at the restaurant.
This is because Grubhub, like other delivery apps, simply adds restaurants to its “marketplace,” which is how the company refers to the offerings on its app, even if they don’t want to be there. In a statement, Grubhub said that it sources information such as menus and hours from the internet.
“Kin Khao was one of these restaurants we added to our marketplace for this initiative to include more restaurants on our platform, and unfortunately, we referenced the incorrect menu for this restaurant. As soon as they reached out to us expressing they'd like to be removed and flagged the incorrect menu, we honored the request,” the statement said.
The Philadelphia Inquirer reported how Grubhub also features a payment system called "Place and Pay," where a customer places an order through the site, a driver places an order inside the restaurant, then uses a Grubhub Driver Card to pay for the order. This allows Grubhub users to place orders with restaurants that are not technically on the app. In a tweet, Techamuanvivit was adamant that this didn’t happen at her restaurant. Techamuanvivit did not respond to Motherboard’s request for comment.
This isn’t the first time that Grubhub and Seamless have played fast and loose with restaurant owners’ wishes, and potentially deceived users in the process.
Last year, a report from New Food Economy revealed that both apps owned thousands of URLs for “shadow sites.” These are sites that look official but are really put up without a restaurant's permission so that the apps can extract an extra commission on orders. At the time, Grubhub framed this as “service” to its partners and said that it had discontinued the practice. Soon after, Motherboard learned that Yelp, via a partnership with Grubhub, was replacing restaurants’ phone numbers with ones that route through Grubhub so that the company could take a cut of each order.
Grubhub and Seamless aren’t the only delivery apps that expose their users to confusing practices, either. A common fixture of most delivery apps is “ghost kitchens,” physical kitchens that offer dishes from multiple “brands” from a single location through delivery apps.
Take DoorDash: on their site is a restaurant named Happy Khao Thai. Happy Khao Thai lists its delivery address as “Kin Khao, 55 Cyril Magnin St, San Francisco, CA 94102, USA.”
Happy Khao Thai's top delivery locations are listed as Los Angeles, Miami, San Francisco, Austin, Portland, and Brooklyn. At every location, we find multiple restaurants sharing one delivery address with Happy Khao Thai. Whether it’s in Los Angeles, Miami, San Francisco, Austin, Portland, and Brooklyn, you find the same restaurants over and over again: Wings & Things, American Eclectic Burger, Della Bowls, Red Corn Taqueria, Rebel Wings, Fork & Ladle, Burger Bytes, and more.
As reported by Portland paper Willamette Week, these restaurants are “virtual brands” of Reef Kitchens, a Softbank-backed company that operates ghost kitchens. It’s an outgrowth of Reef Technologies, a parking facilities company that pitched itself as a tech startup to the Softbank Vision Fund. Reef’s strategy is simple: turn its parking lots and various real estate properties (and some food trucks) into ghost kitchens and team up with investors to overtake established players in the restaurant industry.
No seating, one physical kitchen, several restaurant brands, but everyone shares ingredients, equipment, and staff. That emphasis on “sharing” to cut costs and realize returns is just one reason why former Uber CEO Travis Kalanick has his own ghost kitchen start-up. It’s likely that anybody ordering from one of these “restaurants” (or any other ghost kitchens) on a delivery app has no idea that they’re not coming from an actual restaurant.
In the meantime, delivery companies and ghost kitchens continue to apply pressure on the industry in hopes of accelerating a race to the bottom in prices and wages that might, somehow, net profits.
Take DoorDash, for example, which came under fire after it was revealed to be stealing tips. Instead of paying drivers a base rate and tacking on tips as additional pay, tips were considered part of the base rate. So, if you were guaranteed $10 for delivering food and the customer tipped $5, instead of $15 you might get $11. This is because DoorDash would pay the order guarantee and its own guarantee of $1 per order, but keep the tip. Obviously, anybody tipping on the app would assume that their tip would go to the intended recipient.
For months, DoorDash defended the policy. It promised to change it in July 2019, then dragged its feet until constant coverage of its stalling forced DoorDash to change the exploitative model late August 2019—but refuse back pay for drivers it stole tips from. That improvement, however, seems minimal at best: according to one study, DoorDash pays its average worker $1.45/hour after expenses, nearly a third of DoorDash jobs actually leave drivers in the red after expenses, and just 11 percent pay more than the federal minimum wage of $7.25/hour.
The tipping policy didn’t just deceive the customer, but like many actions that delivery apps take, hurt workers.
Uber Eats, for example, will exploit any worker at any subminimum wage in pursuit of elusive profitable margins. Even as Uber Eats sells off international units to rival competitors, the dream persists and that is enough for them to justify sudden pay cuts that leave drivers struggling to survive.
The delivery apps all chase the same dream: a dominant market share, or better yet, monopoly. They’ll do anything: both Uber Eats and DoorDash already try to beat the competition by undercutting their prices. And not only do Uber Eats and DoorDash list ghost kitchens on their site, but both companies are rolling out their own. There’s not much evidence ghost kitchens can actually yield anticipated profits but, like the other unicorn implosions, we will likely find out too late, once billions have been spent on unsustainable, unprofitable, and uncompetitive ventures.
Today, just ordering a meal at the end of an exhausting day is beset by predation and uncertainty. In the name of disruption, venture capitalists have figured out another way to extract more wealth at great cost to everyone else.