Grubhub CEO Matt Maloney has responded to reports that his company creates fake websites for its restaurant partners, claiming that, according to its contract agreements, these businesses have signed away permission for Grubhub to engage in the marketing tactic on their behalf. According to a partial Grubhub contract obtained by the Los Angeles Times, a provision states that Grubhub “may create, maintain and operate a microsite (“MS”) and obtain the URL for such MS on restaurant’s behalf.”
Grubhub provided The Verge with a similar snippet. Grubhub charges varying tiers of commission fees, the highest being “marketing commission” at 20-plus percent. The contract does not explicitly specify whether these microsites are considered “marketing” or what exactly these microsites would look like. Crucially, the contract does not specify whether Grubhub microsites would use proprietary restaurant photos, logos, or domain names that sound similar to / compete with the business’s actual site. (Disclosure: my parents own a restaurant business that is listed on Grubhub / Seamless.)
In New Food Economy’s report last Friday, restaurant owners say they “never gave [Grubhub] permission” to create these microsites and say the company is intercepting customer’s direct orders in an effort to charge high commission fees. It is, however, possible that this fine print was overlooked upon contract agreement.
It is also unclear whether this provision was communicated to business owners as optional, as the sites seem to be created by default. Grubhub says it no longer offers these microsite creations since sometime last year after it completed its Eat24 acquisition, although sites that have been created prior to 2018 still remain active. The company says business owners may request that the microsites be taken down without any cost to them or ownership transferred to the restaurant owners if they so choose.
In Maloney’s email, the CEO maintains that the sites were created in an effort to boost restaurants’ online presence and that these websites do not drive up commission fees from businesses. Grubhub is currently battling a lawsuit that alleges that the company bills restaurants for commission fees when calls are made through the numbers Grubhub’s microsites list, even if those calls do not result in an order.