Restaurateurs across the country say they are waking up to a years-long, high-tech bamboozling by Grubhub involving hidden fees for orders that never happened — an allegation that could cost the company millions, The Post has learned.
Last November, a woman called Italian eatery Enoteca at 6:50 p.m. to ask if they had gluten-free pasta. The Brooklyn restaurant was charged a $9.07 fee for the call — even though no order was made — by Grubhub, America’s largest food ordering service.
More recently, an upscale Mediterranean restaurant in Manhattan, which declined to be named for this story, was charged for telling a hungry customer that it was closed for a private event.
Grubhub earned $9 on that, among other bogus orders, the owner told The Post.
A third restaurateur told The Post he is being charged an estimated $2,000 a year at just one of his five restaurants due to calls from customers with questions about menu items.
Grubhub, which owns food delivery service Seamless, tells restaurants that it will only charge them for food orders it helps to generate, documents show. But eatery owners say the Chicago company, which also owns MenuPages.com, has been quietly billing them for all kinds of calls, including calls for dinner reservations or complaints about not enough duck sauce.
The payoff to Grubhub, a publicly traded company, is hard to quantify, but a new lawsuit filed in Philadelphia federal court in December is seeking $5 million in damages, an amount that could increase if other restaurants join the litigation, which is seeking class-action status.
The suit, filed by Munish Narula, owner of Tiffin Indian Cuisine in Philadelphia, claims the charges for phantom orders have been going on “for at least seven years,” and are widespread across the company’s 115,000 restaurant partners.
Behind the hidden fees, according to the lawsuit and restaurant sources, is Grubhub’s practice of setting up brand new phone numbers for restaurants it contracts with. It displays its phone numbers on its Web site and app instead of the restaurant’s actual number.
Customers who rely on Grubhub’s numbers may never know the difference because Grubhub automatically forwards its calls to the restaurants, which then fill the orders.
Fees for non-orders have the effect of doubling Grubhub’s normal commissions of 15 percent to 20 percent of the final bill, restaurateurs say. For example, the woman who called about the gluten-free pasta placed an order on Grubhub’s app two minutes later, earning the company an additional $9.18 — or a 36.5 percent commission on the single order, documents show.
Mike Evans, one of Grubhub’s cofounders, has said that his company uses a “statistical model” to determine whether or not a phone call through its system resulted in an order or not.
“It turns out to be possible to predict with a high degree of accuracy which calls are orders or not,” Evans wrote on Web site Quora in 2013.
Narula’s lawsuit claims Grubhub’s statistical model is a mere egg timer — one that charges for any call above 45 seconds.
“We believe the Tiffin case is without merit and dispute the claims,” the company said in a statement.
Restaurants “have the ability to review and audit recordings of phone calls through their dedicated portal and can easily dispute any charges,” the company added, referring to the company’s practice of recording calls made through Grubhub lines.
But Narula’s suit claims the company refused to give him transcripts of his Grubhub-recorded calls in March 2018, when he first realized he was being charged for non-orders. He claims Grubhub only started making transcripts available to him and other eatery owners many months later, in August 2018.
Grubhub disputes this, saying it has provided the transcripts all along.
Enoteca owner Marco Chirico, 31, said he was only able to access to his transcripts for a few months when he first noticed the phantom orders last December. He estimates his losses ranged from $400 to $900 a month for the period he was able to access.
And yes, Grubhub refunded Enoteca, Chirico told The Post — but only after making him wait 45 minutes to an hour to speak to a representative.
On Friday, Eunhee Park Cohen, the owner of the Hell’s Kitchen restaurant Tabouleh. also had trouble reviewing transcripts tied to 21 questionable charges from April tallying $4.50 to $5.47 a call.
“Usually it’s older people calling. Their conversations are very lengthy,” she said of the charges before laying into Grubhub for making her work to find hidden fees.
“Do you think all the small restaurant owners in New York City … read each thing?” she asked of the call transcripts. “You don’t have time to go to the bathroom sometimes,” she said of the business.
After disputing the charges and getting a refund, Chirico alerted the New York State Restaurant Association, which immediately sent an e-mail to its 1,000 members in the city, warning them to check their accounts.
The February memo from NYSRA president Melissa Autilio Fleischut says the association heard about the problem from Chirico and a second unnamed member.
“The percentage in commission they take, and the things they take from you that you don’t notice —it hurts you. It hurts the business,” Chirico said.
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