Lawsuit accuses Google of stealing restaurant customers
Filed in Florida, it seeks class action status
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A Florida restaurant group has filed a lawsuit against Google, alleging the tech giant diverted orders from restaurants. It seems to have to do with design and experience changes the company made in 2019 to encourage fast access to online ordering through third-party services. Per the filing, “Google determined it could make even more money from its position as the destination-of-choice for consumers looking up restaurants by directing the user into one of two new environments that it dreamed up.” The lawsuit is seeking class-action status.
Statements from Google representatives in online coverage of the suit call it a “mischaracterization” and state Google plans to “vigorously” defend itself.
Essentially, the lawsuit says that Google, by design, is directing customers away from restaurants. Instead, customers are encouraged, by design, to transact with a third-party provider. And in some cases it’s a third-party provider that the restaurant hasn’t necessarily signed on to deal with.
While convenient for diners, these online listings can be confusing for businesses not totally tapped into the whims of big tech. Google’s online help forums are full of business owners looking for advice on how to change which third party delivery services appear on the platform. (The answer: contact the delivery providers, not Google.)
“If you Google my restaurant, because of Google and third-party deals, despite all the effort I put into marketing, I still get taxed a lead generation fee by default,” one of my restaurateur friends lamented when I asked about it. “The right thing to do is to not have DoorDash buttons at the top — let the restaurants funnel to DoorDash if they want,” they added.
In a statement to Ars Technica about the lawsuit, a Google rep said, “We provide tools for merchants to indicate whether they support online orders or prefer a specific provider, including their own ordering website. We do not receive any compensation for orders or integrations with this feature.”
It’s also important to note that third-party providers also integrate direct ordering features with Google — restaurants do have options. DoorDash’s Storefront product, for example, allows restaurants to accept direct orders via Google, and they aren’t charged commission fees.
In some ways, the filing is an example of a larger problem with the way we discover and interact with restaurants online.
So many restaurant technology brands work to market themselves to both businesses and restaurant diners, inserting themselves between restaurant and guest. In plenty of cases, they charge for the privilege. When tech companies do right by both diners and restaurants, this works just fine. Restaurants are right to worry when the power balance swings in favor of the tech companies.
Google has solidified its place as a leader in lead-generation, that is, one of the top ways that people find out information about a business. You know who else is good at lead generation? Third-party delivery platforms with marketplaces designed to support fast and simple searches.
You know who else is good at lead generation? Third-party reservations platforms like Resy and OpenTable. In fact, lead generation was literally built into OpenTable’s pricing models, some of which charge restaurants per diner seated through its channels. (That is: if the diner finds the restaurant via OpenTable search, the restaurant pays a small fee for providing the discovery. Restaurants aren’t charged if the diner books directly through the restaurant’s channels.)
There are more! Yelp, for example, gives businesses plenty of tools to manage their online presence, but charges a premium for things like displaying a logo on their business’s listing. While a customer is pretty unlikely to confuse a restaurant's Yelp listing with its website, the point is that so much of a restaurant's own image creation and maintenance happens well outside its walls.
This is, of course, not an exhaustive list of consumer brands that insert themselves between restaurant and diner. But it’s proof that what this Florida restaurant group is asserting in its Google lawsuit has, in fact, become just part of the business landscape for a restaurant today. And for some restaurants it’s definitely not positive progress.
Restaurateur friend sums it up: “When you use big money to choke restaurants out of customer access and tax them for it — you’re an asshole.”
What else is happening?
Bear Robotics announces an $81 million Series B round of funding. That’s the company behind the Servi robot, the friendly front-of-house bot that is able to serve guests at their seats and help staff clear tables. The tech is already in restaurants from small independents to large multi-unit chains like Chili’s and Denny’s. Bear says it’ll use the cash influx to enter more restaurants.
Speaking of front-of-house robots, I wrote a piece about them for Asif Journal, the online content arm of Asif Culinary Institute of Israel. (Also the first time I’ve seen my work translated to Arabic and Hebrew!)
Chipotle announced it would test a kitchen robot of its own. The bot is from Miso Robotics, maker of Flippy, who works mostly at White Castle. Chipotle’s version makes tortilla chips. They’ve named it Chippy. For real! Right now it’s being tested in Chipotle’s test kitchen and should show up at restaurants in southern California later this year.
Last week, I mentioned Popchew, a new startup that just landed a few million in funding for influencer brands. My pal Barb Leung takes a very, very detailed look at the young service as it stands today and offers some great analysis after conducting her own ordering experiment. Also worth noting that Popchew’s co-founder contacted me after last week’s coverage promising there’s “more to [the company] than meets the eye.” Update TBD!
Resy picks up the tab to celebrate millions of reservations. In a clever marketing play, Resy surprised a few dining rooms’ worth of diners last week by buying them dinner in a handful of cities. It’s doing it again this week! I am jealous! The move is to celebrate hitting reservations milestones, counted in millions, as part of Resy’s larger initiative to encourage bookings. Earlier this week though, the company sent an excited but light-on-specifics email explaining the buyouts. Resy had to later clarify details via Instagram including which reservations are eligible to receive free dinner. There is literally nothing people love more than free food. Nothing.
Reef Technology tries out fine dining, sorta. The ghost kitchen specialist, which counts Wendy’s and Del Taco among its customers, announced a partnership with The One Group this week. The parent company to STK and Kona Grill will be using Reef to test new markets for its products, including a delivery-only operation in Austin, Texas. Is food cooked in a ghost kitchen marketed by a brand traditionally associated with a formal dining experience fine dining, though? Or is it just a big fat brand extension that could change STK’s vibe? (The One Group’s CEO called it a “test” in a recent earnings call.)
-Danielle Hyams
Russian funding issues doomed speedy grocers Buyk and Fridge No More. But industry experts say it’s only a matter of time until more in the space go under, citing rapid growth and the sheer amount of investor money being poured into attracting customers. "The closure of Fridge No More and Buyk is a wake-up call to the rapid grocery delivery industry," Brittain Ladd, a retail consultant who follows the delivery industry, told Insider. "The days of easy capital raises are over." (ed. note: Are they though?)
-DH
Amid rising gas prices, Uber and Lyft have added surcharges. Uber riders will see an additional fee of $0.45 to $0.55 per trip, while Uber Eats deliveries will include a $0.35 to $0.45 surcharge. These will last for at least two months and are applicable in the U.S., Canada, New Zealand and Australia. New York City riders will not be seeing surcharges; drivers there received a 5.3% increase on March 1 to meet the city’s mandated minimum earning standard, while most delivery workers in the city travel by bicycle. Lyft has also announced it was adding fuel surcharges. Both companies said the entirety of the surcharge will be given to drivers, even, at least for Uber drivers, if the vehicle is electric. Meanwhile, DoorDash announced it would give its drivers 10 percent cash back on gas purchases made using the company’s debit card — even if they’re not dashing while filling up. It will also pay weekly bonuses for drivers who log the most miles.
-DH
Swiggy eyes $1 billion IPO. The Indian food delivery giant, which was valued at $10.7 billion in its Series K financing this past January, is aiming to raise up to $1 billion in its IPO, which it plans to file next year.
-DH
