A new law just took effect in California on January 1 that prohibits food delivery apps from listing restaurants among their offerings without expressly contracting with those restaurants first.
It may seem like an obvious thing to assume that all restaurants one finds on DoorDash, Caviar, Grubhub, and the like have agreements with the apps to have their food sold there. Not so! At least up until a new was passed in the California legislature last year, Grubhub and its sister site Seamless had a practice of listing restaurants and their menus on their websites and apps in order to appear like they had a wider selection than competing apps. In some cases, the app would simply serve as a middle-man (as Postmates has long done), ordering takeout from the restaurant, sending a driver to retrieve the legitimate takeout order and deliver it, and then pocketing any fees, but without any contract with the restaurant.
And while this story had been bubbling up elsewhere, it blew up in San Francisco last February when Michelin-starred Thai spot Kin Khao — which had never offered takeout or delivery up until the pandemic began — received a phone call from a Grubhub customer who was impatient about a delivery order.
In that case, it turned out that there was also some mix-up between Kin Khao and a Thai "ghost kitchen" — a commissary kitchen cooking food for delivery only, with no brick-and-mortar restaurant — with a similar name, Happy Khao, had its menu mislabeled by Grubhub. But the story, and the online rage from Kin Khao owner Pim Techamuanvivit, led to more attention being given to the practice of non-consensual menu and restaurant listing.
As Eater reports, other Bay Area restaurants fell victim — like in the case of Eli's Mile High Club in Oakland, where a long outdated menu posted to one app caused orders to be placed that had to be canceled, and the app placed the blame on the restaurant rather than shouldering the blame themselves.
Grubhub responded to the scandal by saying this was simply an "initiative" to include more "high demand" restaurants among their offerings, saying, "Kin Khao was one of these restaurants we added to our marketplace for this initiative to include more restaurants on our platform, and unfortunately, we referenced the incorrect menu for this restaurant."
San Diego-based California State Assemblywoman Lorena Gonzalez then proposed Assembly Bill 2149, which was signed into law in September, prohibiting the practice of these non-consensual listings, and forcing apps to directly engage with restaurants before including them among their offerings.
This means that thousands of restaurants are likely to disappear from Uber-owned Postmates, DoorDash and others — apparently out of 700,000 restaurants on the Postmates app, only 115,000 had partner contracts with the app, according to the Wall Street Journal. And Grubhub still had no contracts with about 55,000 of the 300,000 restaurants it offered delivery from as of the third-quarter of 2020.
Selection, therefore, is going to get narrower on most of the apps, and not just in California. Per the Journal, Minneapolis already passed a similar ordinance about restaurant consent, and so have other cities including Philadelphia, Denver, and Tucson, Arizona. New York State appears to be the next state that will pass a statewide law like California's, sometime this year.
But come on... as "growth strategies" go, this was a shady one, and it's far from the only way that delivery apps have proven themselves to be detrimental parasites in an industry that does not need any more trouble right now.
Photo: Kai Pilger