Dive Brief:

• Grubhub will create a new third-party task force to review the way it charges restaurant partners for phone orders, according to Crain’s New York. 
• The move comes after the New York City Council sent a letter to Grubhub CEO Matt Maloney threatening to pursue legislation if restaurant complaints weren’t addressed.
• The company’s task force will provide recommendations within 60 days on how to address the complaints and better communicate with restaurant partners.

Dive Insight:

Complaints about Grubhub's phone policy started emerging in the spring. The New York Post reported that restaurants were being charged between $4 and $9 for phone calls from Grubhub channels even if those calls didn’t result in sales. In other words, restaurants were being charged Grubhub's fees even if a customer was just calling to find out operating hours. 

In response to this criticism, Grubhub launched a three-point plan in August that included an extension of its look-back period for restaurants, enabling them to review all phone orders within 120 days, from 60 days. This provided restaurants with more time to notify the company for a refund if a charge was issued. Grubhub also said it would launch a new website to make it easier for restaurants to request direct control of any URLs registered as part of their contract with the delivery platform and that it would hold roundtable events to foster direct conversation with restaurant partners. 

But the City Council's letter seems to indicate that the extension hasn't rectified these issues and that complaints from restaurants are still coming in. Indeed, the City Council argues that refunds should be issued for such charges regardless of how much time has passed. Grubhub has defended its timeframe, however, noting that it protects consumer privacy and data. 

The biggest question is whether or not a task force will be effective in managing Grubhub’s ongoing complaints about erroneous phone charges. Hiring a third-party vendor to examine these issues could help restore some trust. Grubhub said it uses an algorithm to flag unfair charges, but with these issues continuing to linger, its system may require human oversight.

This marks one of many issues the company has had to overcome this year. Grubhub has also been accused of price-gouging its restaurant partners and registering web domains that mimic local restaurant websites, for example. In July, Senator Chuck Schumer called for a federal investigation into the company. 

Andrew Rigie, executive director of the NYC Hospitality Alliance, told Crain’s, “It’s troubling that time and time again Grubhub has to face government intervention to do the right thing by their restaurant customers.”

Combined, these issues add up, and Grubhub will have to find solutions for all of them to maintain trust from its restaurant partners. Without that trust, the company will have a harder time competing in the intensifying delivery space. 

Grubhub itself has acknowledged that competitive environment. The company’s stock value dropped more than 30% in October after weak Q3 results and a transparent letter from Maloney noting that “the easy wins in the market are disappearing a little more quickly than we thought.” It’s clear that Grubhub could use some tailwinds, and fixing its fundamentals such as this lingering phone issue could be a start.