The primary group of food delivery service apps—Postmates, DoorDash, Uber Eats, and Grubhub, which also owns Seamless—are being sued over what the complaint describes as anti-competitive tactics and hefty fees that hurt businesses and customers by limiting consumer choice.
The complaint, filed Monday as a class action in the U.S. District Court for the Southern District of New York, alleges that the delivery apps have “cannibalized” the dine-in market by establishing control over the pricing of food in their respective cities of operation.
The complaint states that the companies are able to dictate pricing through the platform by imposing “unlawful” clauses against price competition that prevent eateries “from charging different prices to meal delivery customers than they charge to dine-in customers for the same menu items.”
According to the filing, the delivery companies charge anywhere between 13.5 percent to 40 percent in fees to restaurants, despite the already narrow profits restaurants typically earn. The complaint argues that these restraints on pricing as well as costs to restaurants to offer their food on the services necessarily drives up prices to consumers, rather than encouraging them to eat out with competitive pricing in-restaurants.
“The rise of the four Defendants has come at great cost to American society,” the suit states. “Defendants offer restaurants a devil’s choice: in exchange for permission to participate in Defendants’ Meal Delivery monopolies, restaurants must charge supra-competitive prices to consumers who do not buy their meals through the Delivery Apps, ultimately driving those consumers to Defendants’ platforms. Unable to offer consumers the increased choice of paying better prices to dine-in, restaurants have seen precious dine-in customers slip away year after year.”
Additionally, the suit took aim at exploitative labor practices enabled by the gig economy and the delusional claim by these companies to their investors that eventually, the delivery drones of their wildest dreams will replace human workers who require actual pay—however meager—and who are driving up costs in the meantime.
The suit is seeking damages of three times what is determined to have been the cost to consumers. Grubhub declined to comment on the allegations in the complaint about allegedly anti-competitive practices and their impacts to restaurants and consumers. Uber, DoorDash, and Postmates did not immediately return a request for comment.