NYC Council Asks Grubhub To Pay Back Restaurants

More than 30 members of the New York City Council sent a letter to Grubhub about phone calls that didn’t result in orders but did result in charges, according to a report by The New York Times.

The letter was sent to Matt Maloney, Grubhub’s chief executive, and asked him to hire a third party to review all phone calls that didn’t end in an order.

“A refund must be issued for any phone call fees that did not yield a sale,” the letter said. “In the event that you do not take corrective actions, we will explore potential legislative solutions.”

A spokeswoman for Grubhub said the company was “happy to have an open, working dialogue with the New York City Council” about its relationship with restaurants, “including improving our phone order process.”

The New York City Council has been investigating Grubhub for months, after numerous restaurants complained about the issue. In June, the council had a long meeting where many restaurant owners complained about the fees charged by the delivery service, which can range from 15 to 30 percent of every order. 

Mark Gjonaj, the chair of the small business committee, has said he’s considering legislation that would regulate delivery company fees.

Grubhub has a feature that lets customers make calls inside its app, and listings on Yelp also have a phone number. Grubhub relies on an algorithm to decide whether a phone call results in an order or not, based on different factors, one of which is the length of the call.

Many restaurants have complained that they were charged hundreds in fees for simply talking to a customer about a menu item or a reservation. A chain of Indian restaurants in Philadelphia sued Grubhub, saying that it was overcharged for a period of seven years.

Grubhub recently changed the review period for restaurants to make claims about false charges from 60 days to 120 days.

“Four months is more than enough time for a restaurant to review every call they receive via our platform,” the spokesperson said. The New York City Council disagrees.

“Owners do not have the time and the wherewithal to listen in to every phone call that was placed,” Gjonaj said. “It was a calculated move on behalf of Grubhub knowing that small businesses would not be looking at their statements carefully.”