Pandemic Pricing Prompts Lawsuit Against Food Delivery Apps

Food delivery apps GrubHub, DoorDash, Postmates and Uber Eats were named in a class-action lawsuit filed in Manhattan federal court that alleges price gouging during the coronavirus pandemic as well as before.

Additional service fees charged to restaurants will result in higher menu prices that will trickle down to hurt consumers, according to a Reuters report on Monday (April 13).

Three people who initiated the suit allege that the app delivery services are in violation of U.S. antitrust law by mandating eateries charge the same prices for both delivery and dine-in while levying “exorbitant” delivery processing fees of 10-40 percent.

The lawsuit said that this policy puts restaurants in the position of hitting everyone with higher prices just to do business with the delivery app companies. They also said the policy made it difficult to keep dining rooms full before the pandemic hit.

“Plaintiffs bring this claim for relief on behalf of all Americans who would still [like] to enjoy a nice dinner out with their family before defendants make that impossible,” the complaint said.

The lawsuit seeks triple damages since April 14, 2016.

“Restaurants could offer consumers lower prices for direct sales, because direct consumers are more profitable,” the plaintiffs said, according to a Bloomberg report. “This is particularly true of dine-in consumers, who purchase drinks and additional items, tip staff and generate goodwill.”

“Their fees are outrageous,” Mariam Davitashvili of Brooklyn, a plaintiff in the suit, told the New York Post in a report. She added that said she should not be “paying more for my food” to protect apps.

The lawsuit alleges that restaurants have “little choice” but to contract with delivery app businesses because of the power the apps hold. “For example, in New York City … Grubhub has a whopping 66 percent market share of the meal delivery market,” the lawsuit says.

As more people work from home during the coronavirus pandemic, Uber Eats made the move to expand globally. Uber said it experienced a 28 percent increase in Uber Eats requests from its Uber for Business customers who used the app between February and March.