Dive Brief:
- Grubhub agreed to a nearly $7.2 million settlement in a case originally filed in 2020 that alleged Grubhub falsely advertised unaffiliated restaurants that were added to its platform without permission, according to court documents filed this week in the U.S. District Court for Northern District of Illinois.
- The settlement could involve up to 387,000 businesses that may have had their names or logos used on Grubhub or its affiliate sites without a contract in place during the period of Jan. 1, 2019 to April 30, 2024.
- The close of this case follows a $25 million settlement Grubhub agreed to with the Federal Trade Commission and the Illinois Attorney General last December. That case alleged that the company deceived customers with junk fees and added restaurants to the platform without permission. Grubhub denied wrongdoing in both lawsuits.
Dive Insight:
In Q4 2019, Grubhub added 150,000 non-partner restaurants to help grow its network to 300,000 restaurants as its position as leader in U.S. restaurant delivery market share began to slip. That practice led to significant backlash and lawsuits, especially at restaurants that lacked the capacity to handle delivery orders or were receiving orders for incorrect menu items. DoorDash and Postmates also received criticism for similar practices. All of these aggregators say they no longer partake in this business practice.
In the 2020 case, restaurants alleged that being added to Grubhub’s platform without their permission led to consumer confusion, a loss of sales and operational challenges that “harmed their reputation,” per the settlement document.
“While the practices alleged in this case have not been part of our business model for some time, we’re pleased to settle this case so we can move forward and continue providing excellent value to the over 415,000 merchants who choose to partner with us every day,” a Grubhub spokesperson said in an emailed statement.
Grubhub discontinued the practice last year after hearing feedback from restaurants and made it easier for restaurants to request removal from its platform. When it decided to discontinue the practice, only a small percentage of the 300,000 merchants on its platforms were non-partnered.
Settlement class members can submit claims from Nov. 3, 2025 through March 4, 2026, and will receive an initial payment of $50 and a pro-rated amount depending on the amount of time they were listed on Grubhub.
Third-party delivery aggregators have faced several lawsuits in recent months. DoorDash agreed to over $16 million in a settlement in New York in February and an $11.3 million settlement in Illinois in November both regarding now defunct tipping practices. Earlier this week, Uber Eats settled a case in Seattle for $15 million alleging that it misled delivery drivers over potential earnings.
