AL’s Deli in the Mission offers delivery of its herby falafel sandwiches and smoked meat salads through the service Caviar, but something strange happened two weeks ago. Delivery drivers for a different service started arriving, demanding to know the status of their orders.
The AL’s Deli staff had a question, too: What orders?
“We don’t have order numbers, no data to track them down. We don’t know anything except some driver showing up,” said owner Aaron London. “When you have random companies sending in people blind, it shackles us.”
Aaron London, chef-owner of San Francisco restaurants AL’s Place and AL’s Deli, prepares a dish. He recently learned one of his restaurants was listed on Grubhub without his permission.
Photo: Russell Yip / The Chronicle 2015
The practice of delivery apps such as Grubhub and DoorDash offering food from restaurants without their knowledge came to the forefront last week afterSan Francisco chef Pim Techamuanvivit learned that her Michelin-starred Thai restaurant Kin Khao was listed on a Grubhub site. Kin Khao doesn’t do delivery — it doesn’t even box up food for takeout.
The issue is far more widespread than Kin Khao: The Chronicle confirmed with 19 San Francisco restaurants, including State Bird Provisions, Zero Zero and Michael Mina, that Grubhub listed them without permission. As food delivery apps rush to add more restaurant listings, the practice is creating confusion and damaging reputations. Many restaurant owners wonder whether the practice is even legal, and drivers complain of lost pay from botched or rejected orders.
August 1 Five owner Hetal Shah says her contemporary Indian restaurant is listed on the Grubhub delivery app despite calls and emails to get it removed.Photo: Nina Riggio / Special to The Chronicle
Christian Ribas, a barback for August 1 Five, prepares cocktail supplies for the night. Restaurateurs are concerned that delivery orders sent without their knowledge may lead to disappointed customers.Photo: Nina Riggio / Special to The Chronicle
Manager Jordan White clears a table at August 1 Five, whose employees say delivery drivers show up asking for orders the restaurant never received.
Photo: Nina Riggio / Special to The Chronicle
Delivery is booming regardless. U.S. sales grew 41% from 2018 to 2019, according to Second Measure, a firm that analyzes consumer spending. The Bay Area restaurant industry has reflected this growth. New restaurants now tout delivery, and “ghost kitchens” serve only app orders. Others, like San Francisco’s Mission Pie, say the pressure of competing with delivery apps forced them to close. Commissions can run as high as 30%, according to some restaurant owners — a significant reason for some to decline to deal with delivery apps.
The delivery companies are feeling the pressure, too. Chicago’s Grubhub, which has steadily lost market share to San Francisco’s DoorDash, has been trying to grow by doubling the number of restaurants it lists by the end of the year. But that includes adding restaurants it didn’t have agreements with, like Kin Khao.
What happens when a customer orders from a restaurant that doesn’t even know it’s listed on Grubhub? It depends.
A recent lunch order from Mission cafe Stonemill Matcha on Grubhub, for example, arrived an hour later without trouble. A driver must have followed Grubhub’s directions for such orders: He ordered the food without telling the cafe whom he worked for, paid with a Grubhub-issued card, and then delivered it. (Stonemill officially delivers only through Caviar.) Grubhub makes less money on such deliveries because it doesn’t collect a commission and must cover credit card fees and other costs.
When a restaurant doesn’t do takeout at all — or actively tries to avoid delivery companies — both driver and customer get stranded. That happened when a Chronicle employee tried ordering crab from the classic Polk Gulch seafood counter Swan Oyster Depot on Grubhub for lunch on a recent Monday. It took more than an hour and a half for a Grubhub representative to call and cancel: Swan Oyster Depot had refused the order.
For the driver, these situations are not only frustrating but result in lost income.
Eric Brock, who started driving for Grubhub three months ago in Oregon, remembers calling a restaurant as Grubhub instructed. He placed the order under his own name and went to the restaurant. But once employees saw Brock’s Grubhub credit card, they grabbed the bag of food and dumped it in the garbage, he recalled. They said the restaurant wouldn’t serve delivery companies.
Brock quietly returned to his car and called Grubhub to explain the situation. He didn’t earn any money for the order.
Driving is a side gig to make extra money for Brock. “I especially feel bad for people who are dependent on the income, because you don’t get paid for your time. You get paid for deliveries,” he said. Grubhub confirmed the payment policy but said it is working on improving how such situations are handled.
Brock stopped accepting delivery requests for restaurants without a Grubhub deal in place. Four rejected deliveries later, Brock effectively stopped driving for Grubhub.
“I would get one delivery an hour, for $3 an hour. That’s not even a side job,” said Brock, who recently started driving for Uber Eats.
“We get angry customers because they think we’re not keeping our end of the promise,” said Hetal Shah, owner of August 1 Five.
Kimberly James, a driver in Georgia, started making deliveries for food apps about a year ago. She recalled getting yelled at trying to fulfill orders with unaffiliated restaurants via Postmates and appreciated how Grubhub didn’t force her into those situations — that is, until a few months ago.
“These companies are all the same,” she said. “They’re turning us not only into a driver but a customer.”
DoorDash, which has overtaken rivals to become the largest delivery service in the Bay Area and elsewhere, delivers food without permission because it bills itself as a “logistics company.”
Restaurants don’t have any legal sway in stopping delivery drivers from showing up to purchase food — but they can take action when apps mislead consumers, legal experts say.
“I don’t think a delivery site needs permission to purchase food from a restaurant and deliver it,” said Mark Lemley, a professor at Stanford Law School. But concerns can come up around how the relationship between apps and restaurants are conveyed to consumers, he said.
In 2015, DoorDash was sued by In-N-Out Burger, the California chain with a cult following, alleging trademark infringement after the restaurant found out it was listed on the app. The lawsuit was settled. Doordash no longer lists In-N-Out but still defends its practice, saying it boosts sales to local businesses.
“You can’t use a company’s trademark without permission,” said Robert Wallan, one of the attorneys at Pillsbury law firm in Los Angeles, who represented In-N-Out against DoorDash. “You can’t pretend you have a business relationship when you don’t. This situation is not only an annoyance for businesses who don’t want to be on these apps, but it’s a dead bang loser for the delivery companies.”
Strangely, Grubhub agrees.
How this story was reported
Chronicle reporters interviewed six restaurant owners and four delivery drivers for this story, and contacted 19 restaurants to confirm that their listings on delivery apps were unauthorized. In addition, a Chronicle reporter ordered food from two restaurants listed on Grubhub without their permission to see how the delivery experience would work.
Its chief executive and chief financial officer said in an October letter to investors that listing only partner restaurants is “the right way to build the marketplace” and that “non-partnered options are the wrong long-term answer.” But, they added, Grubhub felt it had to “remove any reason for diners to look anywhere else.”
The once-dominant delivery company, which went public in 2014 and reports earnings Wednesday, is reportedly considering a sale, as is Postmates, which is privately held. (Postmates did not respond to a request for comment.) Grubhub’s stock has fallen by two-thirds since September 2018.
Listing more restaurants may please DoorDash’s and Grubhub’s investors, but it exasperates restaurant owners. Many fear they lose potential diners who order on Grubhub but never receive their deliveries.
“We get angry customers because they think we’re not keeping our end of the promise,” said August 1 Five owner Hetal Shah, who added that her contemporary Indian restaurant has been on Grubhub for months, despite emails and calls to get it removed.
Some restaurateurs such as Kin Khao’s Techamuanvivit and Vikram Bhambri, who was shocked to find his San Francisco high-end Indian restaurant Rooh on Grubhub, are talking to their lawyers.
“There’s no way in hell it’s going to work,” Bhambri said of Grubhub’s moves. “They shouldn’t control our business, just like we don’t control their business.”