Chicago, IL

Illinois “Fair Food Delivery Act” Would Stop Third Party Delivery Services From Taking Advantage of Restaurants

Natalie Frank, Ph.D.

The Fair Food Delivery Act would require formal contracts between third party delivery services and restaurants with penalties for delivering from a restaurant without one.

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Illinois seeks to stop delivery companies from listing restaurants without permissionRoberto Parizotti/Fotos Públicas (CC BY-ND 4.0)

With the pandemic shutting down indoor dining options, food delivery has become big business. Third-party food delivery apps have flooded the marketplace, and they are making big money. However, since COVID-19 has shut restaurant doors, restaurants have been asking customers to order directly from them and not from food delivery apps. With services like GrubHub, DoorDash and Uber Eats charging commissions of 30% on each delivery, restaurants are left struggling, making almost no profit on these orders.

Many restaurant owners in Chicago don’t even know they are listed on third-party delivery platforms, because they are never asked for permission. Some restaurant owners want to provide more upscale options that they don’t want to market for delivery. Even in these cases, third party delivery services have sometimes listed them, call in the order as if they were a customer then send a driver to pick it up. These owners feel this practice is unfair and provides an inaccurate picture of their restaurant.

Restaurant owners in Chicago, have voiced their frustrations with DoorDash and Grubhub for some time, because of such third party delivery companies practice of posting unauthorized content on their platforms. The third-party delivery companies say the practice is “consumer forward,” in other words it provides customers with access to as many restaurant choices as possible. But since these companies don’t always get the material they post directly from the restaurants, there are often outdated menus, hours and prices.

Grubhub has maintained that one of its primary missions to stay competitive is to connect customers with as many restaurants as possible, even without authorization. The company has admitted that in “markets across the country” where they “see demand for takeout,” restaurants will be listed without the consent of owners. This includes Chicago.

Restaurant owners in Chicago are outraged. Lacey Irby owner of Lakeview’s Dear Margaret, said, “It is absolutely ludicrous to me that third-party ordering platforms like Grubhub can list a restaurant on their website without the restaurant’s consent, let alone take orders based off old, incorrect menus. It might as well be called restaurant catfishing — and just imagine how customers must feel after being duped, too!”

Restaurant owners also complain that they have no recourse if an order is late, or a courier makes a mistake and because of this, the restaurant’s reputation can be hurt, when they weren’t the ones who made the mistake, and hadn’t even given permission for the company to deliver their food. These problems are the result of their being few regulations limiting what third party delivery services can do.

A proposed bill in Illinois would address this by regulating third party delivery companies by requiring formal contracts between them and restaurants. Senate Bill 672 would create the "Fair Food Delivery Act," requiring third-party delivery services such as DoorDash, Grubhub and Uber Eats to have formal contracts with restaurants and retailers before they can use the merchant's name, likeness, menus or other intellectual property.

The bill was created to prevent delivery services from advertising that they provide service from restaurants without permission and from placing orders for customers without having a formal written agreement with the establishment. The bill would apply only to delivery services that have an online presence such as a website or smart phone app.

Sen. Melinda Bush, a Democrat and the primary sponsor of the legislation, said the purpose of the bill is to prevent restaurants and retailers from being taken advantage of by delivery services. Bush provided the example of customers complaining to restaurants for wrong orders or added fees when the restaurant may not have been aware the order had been placed by a delivery service. She added that delivery services have operated largely without oversite or accountability for too long and it’s time restaurant owners had control over what happens to their food when it leaves their establishment.

In a news release, Bush acknowledges that third party delivery services can bring in more money for restaurants, but recognizes concerns related to staffing shortages that can leave kitchens without enough personnel to handle a large influx of orders. Without having a way to predict how many orders might come in since they have no way of knowing which or how many delivery services might be operating behind the scenes they can’t properly prepare with enough staff or fresh ingredients. But for Bush the bottom line is permission.

“It’s simply not fair for other people to receive profits from a business without permission to deliver its items,” Bush says.

Companies would be fined $1,000 per violation each day. The bill provides that each day a violation occurs constitutes a separate violation. The bill also authorizes restaurants to recover recovery of any damages, or at least $5,000. The Fair Food Delivery Act passed the Senate on April 29. It must now pass the House and be signed by the governor to become law.

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