By Andrew Miller
Restaurants have been complaining about Grubhub for years.
The food delivery company added tens of thousands of restaurants to its platform without their knowledge or permission.
In many cases, Grubhub used outdated menus with items restaurants no longer offered. This led to canceled orders, delays, and missing items. These combined with Grubhub credit card issues that left restaurants unpaid for food they prepared.
Thousands of restaurants have sent cease and desist letters to Grubhub, asking to be removed from their platform. Their requests were ignored.
This week, the Federal Trade Commission stepped in.
In a federal lawsuit filed by the FTC, they accused Grubhub of baiting customers with low delivery fees before adding additional fees labeled service fees or small order fees. These charges were still delivery fees, just in disguise.
Not to mention its Grubhub+ subscription service claimed to offer free delivery service. It never happened. To add insult to injury, the company made it difficult for customers to cancel these subscriptions.
On the other side of the platform, Grubhub’s drivers were advertised $26 an hour to deliver food. Except the median driver only earned $11 per hour. Only the top 2% of drivers received $26 an hour.
As part of the settlement, the FTC will send out $23.8 million to 640,038 Grubhub drivers and diners this week. This closes out a case it brought with the Illinois Attorney General back in December 2024.
None of that money is going to restaurants.
Grubhub categorically denied any of the allegations in the lawsuit. Regardless, it agreed to pay $25 million of a $140 million judgment, with the rest suspended based on its finances.
Going forward, there will be stricter, more transparent requirements for Grubhub.
Restaurants can only be listed with consent now. Drivers get more realistic earnings expectations. Diners will have more details on fees included in their orders.
However, the restaurants that got listed without asking, cooked food nobody paid for, and got ignored on cease-and-desist letters don’t get any of it back.
According to Grubhub, it never happened in the first place.
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