Over the years, many restaurant owners have contended that third-party ordering and delivery services like Grubhub and Seamless charge businesses excessively high fees that eat into already thin margins, to the point where some owners encourage regulars to place orders by contacting the restaurant directly. But there’s one major obstacle to that workaround: According to a new report by the New Food Economy’s H. Claire Brown, Grubub and its subsidiary Seamless have been quietly buying up more than 23,000 web domains — most of which appear to match real restaurant names — thereby potentially competing directly with official restaurant websites and preventing proprietors without sites from building their own web presences from scratch.
In some cases, these Grubhub-owned sites might “win” in search results, leading those searching for a restaurant to accidentally stumble upon the Grubhub-owned versions and order off a website within its commission fee structure. One Long Beach, California, restaurant, Mosher’s Gourmet Deli, currently has its own website listed fifth in search results; two spots above it is Grubhub’s app page, and two spots below it is the “shadow” website that only links, of course, back to Grubhub.
The websites, which all share similar generic design templates, also display the same, Grub-specific phone numbers used in Grubhub’s app. Each call placed through those app phone numbers is recorded by the platform and earns the company a commission fee on every order, skimmed off the restaurant’s revenue.
Two restaurant owners — including one that doesn’t delivery through Grubhub at all — told Brown that these additional websites were set up without their permission.
When reached for comment, Brendan Lewis, Grubhub’s vice president of communications and public affairs, said in a statement that “Grubhub has never cybersquatted, which is identified by ICANN as ‘generally bad faith registration of another person’s trademark in a domain name.’” The statement describes the microsites as “a service to our restaurants… as another source of orders and to increase their online brand presence. Additionally, we have registered domains on their behalf, consistent with our restaurant contracts. We no longer provide that service and it has always been our practice to transfer the domain to the restaurant as soon as they request it.”
While it isn’t the first time a delivery service has done this, if true, it would be a shady practice for a company that is already in hot water for questionable behavior: Grubhub currently faces a class-action lawsuit filed by several restaurant owners who are accusing the service of charging them up to hundreds of dollars in additional fees for phone calls placed through the app that are not explicitly food orders.