GrubHub Shares Fall In Wake Of Report On Duplicate Restaurant Websites

Online restaurant and food delivery company GrubHub Inc GRUB may have created tens of thousands of websites with the purpose of increasing prices on its platform, according to The New York Post.

What Happened

GrubHub bought 34,000 website URLs since 2010 that looked like a partner restaurant and created similar menu choices, but at higher prices, the Post said in a Sunday story. 

The publication gave the example of The Chicago Salad House; the restaurant's main website is www.chicagosaladhouse.com and its signature salads are priced at $10. 

GrubHub bought the rights to www.saladhousechicago.com and advertises salads at $11 or $11.25, the Post said. 

Some of GrubHub's websites include a GrubHub-operated phone number that the company charges restaurants a commission to answer.

Why It's Important

Andrew Rigie, executive director of the New York City Hospitality Alliance, told The Post that GrubHub's activities raise "ethical questions."

Restaurants could be "losing control" of their operations, and entrepreneurs may not even "understand what it means," he said. 

In a statement obtained by the Post, GrubHub said it created websites "as a service" to restaurants and said the practice has ended.

Yet the Post said an unnamed private investigator provided a list of more than 9,000 "copycat URLs" that remain active today.

What's Next

GrubHub shares were down 1.46% at $76.85 at the time of publication Monday. 

After the Post reported on similar business practices last week, the stock rallied and gained some new support from a Street analyst who issued a more bullish near-term forecast for the stock. 

Related Links:

Report: GrubHub Refunds Restaurant After Excessive Billing

The Sell-Side Upgrade Lifting GrubHub Shares Tuesday

Photo courtesy of GrubHub.