Sen. Chuck Schumer is getting in the middle of the food fight between Grubhub and New York City restaurants by asking the delivery app to eat its “fake” fees.
In May, The Post reported how Grubhub, the country’s largest food ordering service, was charging restaurants in the Big Apple and elsewhere $4 to $9 fees for telephone calls that resulted in no orders.
The company is only supposed to take a cut if an order is placed.
“So today, I am putting in my own order at Grubhub and asking them to eat any fees they wrongfully charged restaurants or even customers,” Schumer said.
Schumer requested that the federal Small Business Administration send a report to Congress on the situation.
The Small Business Administration has guaranteed more than 900 loans to restaurants in the New York area, and the fees could impact the eateries’ ability to pay them back.
He also urged the Federal Trade Commission to be “at the ready” to act because he believes this is an unfair trade practice.
“As a result restaurants lose money and sometimes they have to raise their prices,” Schumer said. “So the cost goes up to the New York consumer. This is a bad thing for the restaurant owners and anyone who eats in a restaurant.”
Late last month, Sami Naim, Grubhub’s director of public policy, appeared before the New York City Council’s small business subcommittee and said restaurant owners complaining about Grubhub charging for phantom phone orders are “in the minority.” However, no pro-Grubhub restaurant owners showed up to the hearing.
The restaurateurs who did show up were there to complain.
The company uses a “statistical model” to determine whether calls placed through Grubhub — which go directly to the restaurant but use a special Grubhub phone number — result in an order.
Restaurants are also supposed to be able to audit the phone calls and be able to easily dispute the charges, but some restaurant owners have said this hasn’t been the case.
That includes Munish Narula, the owner of Tiffin Indian Cuisine in Philadelphia, who filed a $5 million lawsuit in Philadelphia federal court in December.
Narula’s lawsuit claims the company refused to give him transcripts of the phone calls made on Grubhub’s line in May 2018, when he first noticed he was getting charged fees for non-orders. Grubhub only began making them available in August 2018, the suit said.
Now that the practice has been exposed, restaurant owners are arguing with the company over getting their money back.
At the city council meeting, Grubhub’s Kevin Kearns, a senior vice president, said two months was an “appropriate amount of time” for restaurants to flag a fee they shouldn’t have been charged.
However, some owners argue that the practice has been going on for years.
“My mother told me, you make a mess, clean it up,” Schumer said Sunday. “Grubhub, clean up this mess … bogus fees can add up fast.”
Robert Guarino, CEO of 5 Napkin Burger, applauded Schumer for getting involved.
“The more voices added to this conversation are good,” Guarino said. “I’m just concerned about the power that large companies have over my business and businesses smaller than mine.”