Left Field Holdings, a franchisee of Florida-based Lime Fresh Mexican Grill, is suing Google. The class-action lawsuit, first reported by Ars Technica, alleges Google uses “bait-and-switch” tactics to funnel digital orders to the restaurant into expensive third-party channels, depriving restaurants of profitable first-party orders.
The lawsuit centers on Google’s “order online” button, first introduced in 2019. The lawsuit claims the button, situated directly below a restaurant’s trade name in Google search and map results, is designed to appear as if it is sponsored or otherwise authorized by the business. It suggests a better label for the button would be “Google’s Unauthorized Buying Service.”
The button may present users with an ordering field, allowing customers to place an order with a restaurant without leaving the Google interface, or it may present users with a list of different ordering options, which may include the restaurant’s website as well as third-party delivery marketplaces. Orders placed through the Google interface may be routed to third-party providers, the lawsuit alleges.
According to a support page for the feature, businesses can turn direct ordering on and off, but regardless of their choice, “third-party links stay the same.”
The high fees that third-party delivery companies charge are at the heart of the issue. “A restaurant’s motivation to partner with a Delivery Provider is almost never to make a profit on orders received from the Delivery provider,” the suit claims. “Rather, a restaurant’s usual goal is to capture new customers that may later place orders with the restaurant outside of the Delivery Providers’ expensive platforms.”
Chris Britt, co-owner and co-CEO of Mountain Mike’s Pizza, described third-party delivery apps as an excellent “discovery” tool. Users of the app might not have discovered the restaurant without the third-party partner. But if that customer is searching for the restaurant on Google, then they aren’t getting the discovery benefits a company such as DoorDash would provide.
Fees charged by delivery companies vary, but can be as high as 30 percent or more. DoorDash, Grubhub and Uber are suing New York City over the municipality’s effective fee cap of 20 percent, suggesting average fees are more than 20 percent.
The problem, of course, is that restaurants don’t have the option to remove third-party links from their Google profile, running the risk of paying high fees for orders they could have received without the help of a delivery company. In exchange for routing orders to a third-party, the suit alleges that Google “demands a cut-of-the-action, which the Delivery provider happily pays to Google.”
Customer data is another flashpoint in the relationship between restaurants and third-party delivery providers. DoorDash and Uber Eats are suing New York City over legislation that would force delivery companies to share the customer data they collect with the restaurants they order from.
From the lawsuit: “Capturing an order via a restaurant’s website or app not only saves the restaurant money (because the restaurant avoids the Delivery Providers’ hefty fees), but also often fosters better customer relationships. Through their own custom websites and apps, restaurants may offer customer loyalty rewards and promotional programs—programs that drive increased customer engagement, and higher revenues and profits for the restaurants.”
By routing orders away from restaurant websites and into third-party delivery marketplaces, as the suit alleges, Google deprives restaurants of the opportunity to maximize the lifetime value of their customers.
Astroturfing a restaurant’s web presence, as the lawsuit accuses Google of, isn’t a new scheme. In 2019, Grubhub and Seamless were accused of registering thousands of restaurant domains, using them to funnel orders away from first-party ordering channels and into Grubhub’s marketplace. Others, such as DoorDash, have been accused of adding restaurants to their app-based marketplace without the business’s consent.
Google spokesperson Ashley Thompson told The Verge this lawsuit is a “mischaracterization” of the order online button, and that the tech company will “vigorously” defend itself.
“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,” Thompson told The Verge.
The suit seeks to certify a class of “tens of thousands” of restaurants that have been wronged by Google. It also seeks monetary damages and injunctive relief.