Grubhub will be more transparent about its pricing after the Pennsylvania attorney general’s office found that the popular food delivery app charged customers more for some meals than they would have paid at the restaurants.
The Chicago-based company will also pay a total of $125,000 to several Pennsylvania food banks, including Philabundance, in lieu of monetary damages, according to the terms of the settlement announced Monday by Attorney General Josh Shapiro’s office.
“Online food delivery platforms can be very convenient, but consumers deserve transparency so they can make informed decisions about whether to place an order,” Shapiro said in a statement.
Grubhub spokesperson Liza Dee said the company was “pleased” with the settlement.
“Grubhub is committed to supporting all restaurants and diners and is taking a number of steps to ensure price transparency,” Dee said, “and to make it easier for restaurants to ask to be removed from our platform if they wish to do so.”
Food delivery apps have became increasingly popular in recent years. The number of orders nationwide skyrocketed as people hunkered down at the start of the coronavirus pandemic.
Since then, Grubhub is one of several apps that has faced heightened scrutiny, both for how much the companies mark up prices for users and for how their fees can impact a restaurant’s bottom line. In 2020, as the restaurant industry struggled amid pandemic shutdowns, several cities across the country, including Philadelphia, temporarily capped how much of a cut third-party services could take from customers’ orders.
Attorney generals have been moving to make the apps more transparent for consumers, too. Last year, Shapiro and District of Columbia Attorney General Karl Racine came to an agreement with Uber Eats, which agreed to add new disclosures to its app about potential pricing differences.
The latest Pennsylvania case is similar. The attorney general’s office found that Grubhub sometimes charged customers higher prices than they would have paid had they ordered directly from the restaurant, according to court documents, and the company did not make clear to customers that the prices were higher.
The company also misrepresented some information it displayed or linked to, including restaurant menus and phone numbers, making it difficult for people to compare prices between the app and the restaurant itself, the attorney general’s investigation found.
As part of the settlement, Grubhub agreed to make clear to customers on its app and website that the prices there might be higher than they are at the restaurants. Grubhub also said it will identify non-partnered restaurants — “so that diners know that these restaurants do not have contracts with Grubhub” — among other steps to increase transparency.
“This is another step towards delivering a marketplace that is more fair for restaurants and consumers,” Shapiro said, “and I call on all food-delivery platform companies to provide this same transparency as soon as possible.”
