Watertown, NY – Family-owned Italian restaurant takes on Grubhub in upstate federal court over the food delivery giant’s controversial practice of adding restaurants to its online platform without their knowledge or without their consent.
It’s a dirty secret in Grubhub’s business strategy: If a restaurant turns down a formal business partnership, then Grubhub simply adds the restaurant’s menu to its wallet and sends delivery people to look for food like members of the general public.
But many of the estimated 150,000 restaurants listed on Grubhub without their consent say it’s essentially theft. And now Pete’s Trattoria in Watertown has given that claim a legal name: trademark infringement.
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“Pete’s has operated continuously for decades … He has invested considerable time, money and other resources in connection … with the various brands, logos and names of Pete,” the lawsuit notes. “The Applicant’s brands each serve as unique signifiers of Pete’s quality, reputation and goodwill in the marketplace. “
Grubhub’s unauthorized use of Pete’s name and menu for its delivery business threatens to ruin Pete’s reputation, according to the lawsuit.
“The plaintiff cannot control the way the defendant takes care of his food products, makes sure that the orders are correct or that the delivery is prompt,” says the lawsuit.
Prosecuting Grubhub for trademark infringement is a new approach in local courts, but is gaining traction as restaurants around the world grapple with Grubhub’s brutal tactics.
And it works.
Pete’s attorney David Antonucci of Watertown says Grubhub has taken the restaurant off its list since a lawsuit was filed earlier this year. For now, the restaurant is still claiming money for past damage.
This is not the only trademark infringement against Grubhub. Two national class actions put Grubhub to the test for different complaints.
The one filed first concerns a complaint almost opposite to that of Pete: Grubhub lists a restaurant that does not wish to associate as closed and / or unavailable for online orders. Grubhub has agreed to settle this first lawsuit by allowing non-partners more control over their ads on Grubhub, including a way to request that the ad be removed completely.
The second national lawsuit is similar to Pete’s lawsuit, demanding that Grubhub remove restaurants that don’t want to partner with them.
Grubhub made it clear in the first class action lawsuit that it did not intend to dispute the allegations of trademark infringement. Instead, Grubhub told a judge he was interested in settling these cases. Arguments surround whether money would be donated and how many restaurants would be included.
The second class action lawsuit, aimed at preventing Grubhub from adding non-partner restaurants, is still pending. The lawyers are debating what measures could be taken, given the settlement of the first class action.
Antonucci, Pete’s attorney, said he decided not to join the second class action lawsuit and was instead negotiating on his own with Grubhub.
But he credited the national lawsuit with providing insight into Grubhub’s practices.
Since its creation in 2004, the delivery site had forged commercial partnerships with restaurants that wanted to play ball.
But growing competition saw Grubhub’s stock fortunes decline in the fall of 2019, according to the federal Illinois class action lawsuit. In response, Grubhub began an aggressive effort to expand its restaurant portfolio, the lawsuit continues.
Instead of waiting to form business partnerships, Grubhub added 150,000 new restaurants in three months to its service without obtaining prior approval, the lawsuit continues. It turned out to be “very lucrative”.
Grubhub implicitly acknowledged this strategy to Syracuse.com | The Post-Standard in March, saying it “puts restaurants on our platform to provide variety for diners and generate more orders for restaurants.” They hope to partner with these restaurants (and charge commissions) later.
But local restaurateurs say this approach causes a myriad of problems locally, while Grubhub has no incentive to do it right.
Perhaps the biggest complaint is that Grubhub finds and publishes outdated menus, timetables and other information for non-partner restaurants. Some of this information is several years old, contains hours of operation that no longer exist, food that is no longer manufactured and at prices that are no longer valid. The restaurant, not Grubhub, is blamed for such mistakes, restaurant owners say.
The class action lawsuit describes the scope of other reasons restaurants do not partner with Grubhub:
Customers blame restaurants for poor service from Grubhub. When an order is delivered cold or with the wrong food, the restaurant is blamed, even if Grubhub’s delivery guy is at fault. Customers assume that Grubhub has the restaurant’s blessing.
Some restaurants don’t want additional orders. Popular local restaurants don’t need extra business. Their business plan does not include additional capacity to fulfill Grubhub orders without disrupting normal operations, overburdening staff, or sacrificing quality.
You don’t want to lose control of customer service. By letting Grubhub take over the ordering and delivery, restaurants are relinquishing substantial control over the customer experience. For some, it is not worth doing the extra business.
Grubhub workers are sometimes late or unprofessional. If delivery people arrive late, the food may be delivered cold or stale. Drivers can ‘stack’ orders, which means they wait to pick up multiple orders at once, leaving some of the food for long periods of time. Grubhub drivers can sometimes also cause their own problems, by not showing professionalism or by committing petty crimes.
Too many canceled orders or customer refunds. Grubhub makes it easy to cancel orders. But those canceled orders can cost restaurants a lot of food and money. Some restaurants have complained that Grubhub issued refunds without contacting the restaurant to see if a refund was warranted.
Some restaurants don’t want a take-out or delivery business. Some restaurants, especially those that specialize in fresh food, may not want a take-out business.
You want advice to go to restaurant employees. When food is ordered through Grubhub, the tips go to the company and its drivers.
Some restaurants have their own delivery service. Restaurants that want to control quality and customer service have their own delivery services.
The restaurants are teaming up with one of Grubhub’s competitors. Restaurants that wish to partner for takeout will seek out the best deal among delivery providers. These restaurants do not want or need the services of Grubhub.
Grubhub takes too many profits. This became a problem locally, when delivery services were charging exorbitant fees during the Covid-19 pandemic. But Grubhub can take more than 30% of the total order amount, leaving restaurants under water when selling.