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Philadelphia Restaurant Sues Grubhub Over 'Illegal' Business Practices

Tiffin's owner claims Grubhub charged him unfairly for phone calls that didn't include orders.

by Bettina Makalintal
Mar 18 2019, 2:59pm

Photo: SOPA Images via Getty Images

For those of us whose skin crawls at the thought of making phone calls, food delivery by app has been a godsend of technology. On my phone alone, I’ve got UberEats, Postmates, Sweetgreen, Grubhub, and Seamless, just in case. But a bummer remains: on all of those apps, if you have a question, you still have to make an actual phone call.

You might be on Grubhub looking to order a burger, for example, but you need to know if that gluten-free bun is truly gluten-free, so you begrudgingly call the number on the app and ask. The restaurant might say, ehh, it all goes on the same griddle, so you decide it’s not burger night after all and don’t place an order. If you had ordered, Grubhub would take a cut from the restaurant, which makes sense. But according to a lawsuit from a Philadelphia-area Indian restaurant chain, Grubhub still takes a commission from the restaurant for the phone call, even if you hadn’t made an order.

That’s the claim being made by Tiffin owner Munish Narula. As Philadelphia Magazine reported, the phone numbers listed on Grubhub aren’t always the same as what the restaurant itself lists (MUNCHIES verified this by looking at a small sampling of Brooklyn restaurants). Basically, the lawsuit says, Grubhub reroutes the call to the restaurant’s real number and charges for it—even if the caller didn’t place an order.

When Narula brought up the phone commission charges to Grubhub, he was allegedly told that Grubhub charges on all calls over 45 seconds; Narula claims that 80 percent of Grubhub’s phone commissions were on calls unrelated to orders. He also claims to have been threatened with suspension from Grubhub if he took legal action or complained to the media. According to the lawsuit, all of that amounts to “illegal business practices and breach of contract.”

The class-action lawsuit seeks damages and reimbursement for those dealings, wrote Philadelphia Magazine, and it could affect many of the service’s thousands of partner restaurants. As the Chicago Tribune wrote on Thursday, Grubhub has claimed its practices aren’t deceptive, and because of a clause in Tiffin’s contract, Grubhub’s lawyer has filed to move the case to arbitration instead of going to court. We’ll have to wait and see how Tiffin’s lawsuit shakes out, but it could affect a lot of delivery spots.

“We believe this case is without merit and dispute many of the claims in the filing. As such, we are exploring all avenues of response,” a representative for Grubhub told MUNCHIES in an email. “We value our more than 105,000 restaurant partners and work closely with each to bring them additional diners and more business.”

MUNCHIES has reached out to Tiffin for comment, but has not yet received a response.

Accusations of shady behavior aren’t uncommon for this new wave of delivery startups. Instacart and DoorDash have recently faced allegations of “tip theft” after claims from drivers that they weren’t receiving 100% of their tips. (DoorDash’s controversy was fanned by the fact that it had just raised a $400 million investment.) As far back as at least 2016, restaurants have reported feeling burned by delivery apps and their pay-to-play schemes.