Delivery apps have been growing more and more around the world. But many of these apps have been causing many problems for restaurants, leading to them having a harder time being successful. Grubhub is a food delivery company that started in 2004. Obviously not being the only delivery service available, Grubhub has made a good name for themselves and has rose to be one of the top delivery services around. Despite their success, many complaints have come up with Grubhub, mainly from the restaurants they work with.
Multiple lawsuits have been filed against Grubhub for a couple of different reasons. One reason being Grubhub putting restaurants on their site without ever contacting that restaurant. Many restaurants have claimed this, leading to multiple cases against them. Another issue that has been mentioned multiple times was the amount of money taken from each order. Many restaurants that are partnered with Grubhub feel that they get too much money per order. This also led to multiple lawsuits being filed against them.
This paper will compare the actions of Grubhub to ethical theories like individualism, utilitarianism, Kantianism, and the virtue theory. Comparing the actions of Grubhub to these theories will prove if the company is acting ethical or not. From an individualist view, Grubhub would be considered an ethical company because they focus on maximizing their profit. But for the other three theories, Grubhub would be considered an unethical company. For utilitarianism, maximizing happiness for both parties is what is most important. Grubhub only focused on the happiness for their company and not the businesses they worked with. For Kantianism, acting rationally and following the rules is very important. Also, respecting people’s needs is important in Kantianism. The restaurants that work with Grubhub have their own needs that need to be considered before working together. Forcing them to join and taking a big percentage of earnings proves that Grubhub doesn’t fully listen to the needs of these establishments.
Grubhub is a food delivery company founded by Matt Maloney and his co-worker, Mike Evans. People from around the U.S can sign up to deliver food for Grubhub. It started when Maloney and Evans were working as developers for a company called Apartments.com. Working in Chicago, Maloney and Evans were getting tired of the lack of dinner options and the hassle of calling and ordering food. They started by going around to different restaurants in Chicago and getting their menus to put onto their site. Restaurants were charged $140 to be on Grubhub for six months. Many of these restaurants already had their own website so they didn’t see a reason to pay to be on the Grubhub site. Restaurants agreed with Grubhub when they offered to take a 10% commission on what they sold. After getting business in Chicago, Maloney and Evans flew out to San Francisco in 2007 to try and start business over there. Once they realized that business was going good in San Francisco, they started expanding all over the U.S. In 2010, Maloney and Evans developed a mobile app to make ordering even easier, which led to more and more business. Maloney and Evans knew about competition that would make expanding in some places a little more difficult. In New York, a company called Seamless was already doing a similar thing. In 2013, Grubhub bought Seamless but kept it running in New York. Keeping it running made it cheaper for them because they wouldn’t have to advertise Grubhub in New York and they didn’t have to advertise Seamless outside of New York. As of 2020, Grubhub is one of the biggest food delivery services in the United States.
Two restaurants filed a class-action lawsuit against Grubhub for the fact that they have been listing restaurants without their permission. The Farmer’s Wife in California and Antonia’s Restaurant in North Carolina filed a lawsuit with Gibbs law Group. Both these restaurants claimed that they were added to the Grubhub site without wanting too. These aren’t the only restaurants this has been happening to. 150,000 restaurants have claimed that they have also been listed on to the Grubhub site without agreeing to the partnership. Grubhub incorporated this as a business strategy to get more restaurants to agree to a partnership. This has caused many problems for these restaurants, the people ordering, and the Grubhub drivers. If a restaurant was on the Grubhub site without knowing, they wouldn’t get the order called into them. The grubhub drivers would have to find a way to get the food from the restaurant and deliver it to who ordered. Some cases, the menu used on the Grubhub site was outdated and had wrong items and prices on them, so when the drivers went into the restaurant, they weren’t able to order anything and would have to cancel the order. When asked about the lawsuit, they claimed that they wanted to keep doing this to other restaurants, so they had more dining options than the competitors. Grubhub claimed that if someone were to have an issue with being on their site, they could reach out to Grubhub and they would be taken off the site.
This is not they only case against Grubhub. Many restaurants that partner with Grubhub filed a class-action lawsuit against them for the percentage of money that they take from orders. Every time an order is ordered and delivered through Grubhub, around 30% of that order goes to Grubhub. For smaller restaurants, 30%could really be an issue if they do not have much in store activity. Another complaint that came with the amount of money they take is how they charge for non-orders. When a restaurant partners with Grubhub, they are given a new phone number for the app. The number is used for communicating with the restaurant and ordering food from that restaurant. Grubhub has an algorithm that they use to determine when a call to a restaurant is an order or not. The problem is, Grubhub, in many cases, has charged for calls that weren’t orders. It was seen at a restaurant in Philadelphia called Tiffin. Minush Marula, the owner of Tiffin, claimed that they were charged up to $9 for non-orders. In the lawsuit, it was argued that charging for calls isn’t fair because majority of phone calls are to ask questions and not order food.
If Grubhub wants to continue being successful, they are going to have to fix these issues to gain new restaurants and keep the ones that they have. If Grubhub keeps forcing these restaurants into these unfair and unwanted partnerships, then they are going to have a tougher time getting restaurants to willingly partner with them. The company will not grow if they try to force businesses to work with them. Stakeholders also aren’t going to want to work with Grubhub if they don’t change the way they make money from these businesses. Taking too much money can easily loose them business. For some orders, taking 30% would leave restaurants with a small profit margin, causing some restaurants to not produce as much revenue as expected. This can lead to smaller restaurants to not put their business on this site.
Grubhub also has to make sure that they keep the consumers happy. With the news in the case, some restaurants are put on without knowing. This causes some restaurants to get orders that won’t ever be delivered to the consumer. Many people try to order from certain restaurants without knowing that the food will never actually get to them, causing many customers to be upset with Grubhub. If Grubhub doesn’t change their ways, they are going to lose business to other delivery services.
From an individualist point of view, Grubhub is running their business well and trying to maximize their profits. Milton Friedman was an economist that has a theory of individualism claiming that the only goal for a business is to gain profit. Tibor Machan is a philosopher and libertarian a slightly different individualist theory. Machan agrees that a business should always try to maximize their profits. The only difference is that Machan claims that other goals can be had. Not just profit. Grubhub fits under this category for many reasons.
First, Grubhub was trying to force these restaurants to partner with them. As explained throughout the case, a technique that Grubhub uses to gain new partners is putting menus from different businesses on their site without communicating with that business. Their plan was to put these restaurants on their site without actual confirmation in hopes that eventually, they would agree to a partnership. This technique has been incorporated because Grubhub wants to grow and make money. Another way that Grubhub fits this category is because of the amount of money they charge these restaurants per delivery. The main case against Grubhub is how they take around 30% of the money from each order delivered. Many restaurants claim that this is too much and for some orders, they make almost nothing. This follows the individualist theory because Grubhub is still working towards making a profit. When a business decides to partner with Grubhub, the percentages that they are charged are explained. Although the restaurants make money, and in some cases more business, the 30% can add up. Grubhub also makes money from restaurants when customers call in an order. Grubhub provides a new number for restaurants when they agree to a partnership. This number can be used for when an order needs to be placed or to contact the establishment with any questions. Grubhub incorporated an algorithm to tell when an order is placed, automatically charging the restaurant. The problem is, this algorithm has proven to be flawed, charging non-order calls, and practically stealing money from these businesses.
Utilitarianism is maximizing happiness for yourself and others. For a perfect utilitarian view, both parties, Grubhub and their partners, would both be happy with the outcome. The cases prove that what Grubhub is doing would be considered unethical in the utilitarian theory.
Grubhub has been maximizing happiness for themselves. Grubhub has a lot of business around the country, being one of the biggest delivery services. They can get many restaurants to agree with their terms of the partnership and spread their name around enough to get plenty of customers. The problem comes with how they deal with their partners. Many complaints come in from businesses about the rates they get charged from Grubhub. With all the money this company makes, it comes from other businesses that feel they are taking too much. Because of this, they clearly aren’t maximizing the happiness of these companies. To fit this theory, Grubhub would have to fix their rates to something that more people would agree with. The cases against them prove that something can be done to make more people happy. It is also seen with the cases against them signing restaurants up without permission. Again, this is maximizing the happiness of Grubhub because they are giving themselves more partners to make money. But the problem comes because they aren’t considering the other party. If a business doesn’t want to work with Grubhub, then forcing it onto them will not make them happy. The fact that they don’t communicate with the restaurant before putting them on their site causes the unhappiness. To connect with the utilitarian theory, Grubhub should reach out to these establishments beforehand. This way, both parties can get a say in what they want to maximize happiness on both ends.
Kantianism is a theory that was developed by a man named Immanuel Kant. One of the main rules of Kantianism is to act rationally and not consider yourself exempt from the rules. Another important rule for Kantianism is to respect people and their needs. The last main rule of Kantianism is to do what is right because it is right. Both cases prove how Grubhub would be considered an unethical business under Kantianism.
With focus mainly being on doing what is right because it is right, the first case proves how Grubhub doesn’t follow the rules of Kantianism. The first case explains how many restaurants were put on the Grubhub site without knowing. For Grubhub, the right thing to do is contact the business and explain what they have to offer. The second case also proves that Grubhub isn’t focused on doing what is right. If Grubhub were to fit into the rules of Kantianism, they wouldn’t charge restaurants so much per delivery and they wouldn’t charge for phone calls to the restaurant. Grubhub is basically stealing money from restaurants in situations like this. Charging 30% per order also doesn’t help this case. Some restaurants, especially smaller ones, have a hard time affording this. Recently, COVID-19 has caused more people to order food due to restaurants not allowing people inside. Taking 30% from small restaurants during the pandemic barely leaves any money for them to stay running. If Grubhub were to focus on the rules of Kantianism, they would realize this is the wrong thing to do but because they continue to stay the same, they are considered unethical.
Justified Ethics Evaluation
In my opinion, Grubhub is an overall unethical business. Both of the cases against Grubhub prove how they really care about personal gain and not the wellbeing of their partners. If Grubhub wants to be deemed ethical, they have to change the way they get new partners. Forcing restaurants into a deal is not ethical. They also need to realize that they can’t charge these restaurants so much money. It gets to the point where they’re basically stealing money from these businesses. Both of these cases can be fixed but also could’ve easily been avoided.
It is easy to see what two complaints occur most when businesses partner with Grubhub based of the cases. As of now, there hasn’t been a solution to either of these issues, meaning that Grubhub has still been adding restaurants to their site and they still charge restaurants too much. Because there hasn’t been a solution incorporated yet, other restaurants might start filing their own cases against Grubhub. If they don’t come up with a plan to make their partners happier, then their success could be in jeopardy.
On the positive side of things, the solutions can be fairly simple for Grubhub to fix. The first main problem mentioned was how many businesses found themselves on the Grubhub site without ever communicating with Grubhub. Grubhub claimed that putting restaurants on their site without permission was a business technique. Their plan was to have more restaurants available on their site than their competitors. This technique would also help in convincing restaurants to join Grubhub. The easiest way to fix these complaints for Grubhub is to start reaching out to new restaurants. Sending out an email to businesses around the country is an easy way for Grubhub to find new restaurants to put on their site without making anyone upset. Another way Grubhub could gain restaurants is reaching out to them and giving them a trial of their services. After reaching out to these restaurants, Grubhub could set them up in their site for a few months so a restaurant can get an idea of what working with them is like. A simple solution such as this can make business grow. Instead of forcing people into a partnership, they explain what the service is and let the restaurant try it out. After the trial is over, they reach out again and finalize if they want to partner or not.
The second case also has some fairly simple solutions. Many restaurants argue that Grubhub charges them too much per order in a partnership. Especially with the global pandemic, 30% per order can cause some serious revenue issues for businesses. Also, giving these businesses a different number and charging them for calls causes a lot of issues, especially if they continue getting charged for non-order calls. A simple solution is incorporating different levels of partnerships. For example, bigger restaurants could likely afford the 30% per order rather than smaller businesses that could not. When starting a partnership, Grubhub should offer options of a partnership that restaurants could choose from. Grubhub should offer bonuses to the businesses that decide to choose the 30% per order deal and offer a deal that has a lower percentage per order and no bonuses. Giving the option will allow Grubhub to gain new partners and keep the partners they also have. Also, to help with keeping their existing partners, they should get rid of the new phone numbers. Instead, put the actual phone number of the restaurant on their site and incorporate a new program for them to put orders in themselves. Clearly, the algorithm Grubhub uses now is occasionally faulty, charging restaurants for no reason. If a worker at the restaurant is able to answer the phone and fill out the order themselves, there won’t be any situations a business gets charged for a non-order.
In order to keep their business successful, Grubhub need to incorporate some core values. These values will focus on keeping partners happy, so they don’t lose business. These core values should be being honest, being supportive, and being fair. When approaching a new restaurant, Grubhub should consider the size of the business. If Grubhub wants to partner with a smaller restaurant, they should be honest and let them know if it a good idea financially. They should also let them know which plan would be best for them. Grubhub should also be supportive of these businesses, especially during the pandemic. Many restaurants have been having a hard time staying in business because of COVID-19. Being supportive could mean being understanding of the struggles a business can face and not forcing money out of their pockets. Being fair comes with gaining new partners. Grubhub should value communicating with new partners before putting them on their site. Sometimes partner with Grubhub wouldn’t be beneficial for a business so forcing them into a partnership isn’t fair and pretty selfish.
In order to ensure ethical productivity and monitoring of ethics, Grubhub needs to keep up with communication after partnering with a restaurant. Grubhub needs to ensure that their partners are satisfied with working with them. This communication could come in the form of a monthly form. Sending a form for restaurants to fill out monthly can let the people at Grubhub know how people are feeling with working with them and knowing if they need to change anything to keep business going.
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