Uber will pay Chicago a $10 million settlement in an investigation into its business practices.
The city announced the settlement late Monday (Dec. 5), saying it stemmed from a probe into issues like Uber Eats’ and Postmates’ practice of listing Chicago eateries on their platforms without permission, violating the city’s emergency fee cap ordinance during the pandemic.
“No third-party delivery company should be listing restaurants without their consent, and all third-party companies should have been following the emergency cap imposed during the pandemic,” Sam Toia, president and CEO of the Illinois Restaurant Association, said in the city news release. “Our restaurants will receive immediate benefit from this settlement.”
According to the release, Uber already paid $3.3 million last year to Chicago restaurants that had been charged commissions more than the 15% city cap.
The remainder of the settlement will come in the form of another $2.2 million to those restaurants, $500,000 to restaurants it listed without their consent, $2.5 million in commission waivers to those restaurants, and $1.5 million to cover the cost of the city’s investigation.
Chicago sued DoorDash and GrubHub last year over similar practices. Both companies have denied they were in violation of the city’s ordinance, with DoorDash calling the suit meritless and a “waste of city resources.”
The settlement comes as aggregators like UberEats are facing hurdles that could persist for some time, as PYMNTS wrote last month.
Our recent studies have shown that orders using delivery aggregators account for a relatively small slice of restaurant-related commerce.
Nearly 40% of consumers used a food aggregator to place an order in the last six months, we reported in September, but aggregators made up just 2.5% of restaurant transactions. This percentage is far below the 10% completed through restaurant-specific apps or websites.
In this climate, DoorDash and other companies have begun to cut staff and exit certain regions. For example, Just Eat Takeaway.com subsidiary Menulog is laying off workers in Australia, while British aggregator Deliveroo has recently pulled out of Australia.
The holidays may not offer much relief. Research from PYMNTS/LendingClub joint study “New Reality Check: The Paycheck-To-Paycheck Report — The Holiday Shopping Edition,” showed that 29% of consumers will spend less on restaurant purchases in 2022 than they did during last year’s holiday season.