Colorado bill would require third-party food delivery services to sign agreements with restaurants

Small Colorado business battles big company over delivery services
Posted at 5:04 PM, May 19, 2021
and last updated 2021-05-19 23:17:40-04

DENVER — If a smell alone could build a business, Suga Me Sweet in Highlands Ranch would be the model.

One step inside the basement bakery evokes memories of birthday parties, graduation ceremonies and weddings with the sweet aroma.

Owner Kristin Marin started the business about eight years ago with a focus on desserts.

“Every single one of them is handmade, there’s a lot of love and artistry that goes into what we do here,” Marin said.

She spent a year retrofitting her home basement and moved her business downstairs in 2019. Since then, business has been good; she’s often booked days or even weeks out as she and two employees try to fill as many orders as they can.

But in December, things got even busier when Marin started getting more online requests.

“I got three phone calls from GrubHub people in one day trying to order stuff for delivery same day and that’s when I was kind of thinking this is weird,” she said.

Marin had never signed up for GrubHub. In fact, she had met with the company in September and turned down an offer to have them deliver for her since her products take days to make, not minutes or hours.

When she went onto the GrubHub site and typed in her business’ name, she discovered that her bakery had been listed using an old menu without her consent.

“They had hijacked all of my photos, my logo, my name, everything without my consent,” Marin said. “Surprised was probably an understatement of what I was when I found out this was happening.”

Marin called GrubHub and was told the company it didn’t have a bakery in its services so it chose hers and was trying to help small businesses market and expand their brand by listing them. She fought back, saying she didn’t want or need GrubHub’s help.

“I have a credit card processing, I have my own merchant services, I do my own deliveries, I don’t need you to put your hand in my pocket and take out the money that I’m earning,” Marin said.

The Colorado Restaurant Association says the bakery isn’t alone; numerous businesses have complained to them in recent years about having similar experiences.

“There’s certain restaurants that simply don’t want to offer takeout and delivery for food and there could be several reasons for that. If their food has a certain structure to it like sushi for instance,” said Mollie Steinemann, the manager of local government affairs for CRA. “If I have food that needs to be very, very hot or very, very cold I may not want to offer that food for delivery.”

This session, Colorado lawmakers have come up with a bill to help. Senate Bill 35 prohibits a third-party delivery service from selling food from retail food establishments without the business’ written approval.

If the delivery service is found to be in violation, a civil penalty of up to $1,000 can be charged per incident and injunctive relief.

“I think businesses should have the ability to negotiate with other businesses that want to be distributors of their product,” said Rep. Shannon Bird, thee bill’s cosponsor.

Bird says the pandemic made delivery services the lifeblood of restaurants, helping keep many of them afloat for months on end. However, the technology raised its own set of challenges.

“When there’s a situation like that where a restaurant is dependent upon another industry to continue its business, there’s outsized bargaining power there,” she said.

Bird believes without this bill, the restaurants could have tried to sue but it would have been difficult since there was nothing in state law to prevent a company from doing this.

“By prohibiting that in activity restaurant tours have more control over who they’re working with, how these deliveries are taking place,” Steinemann agreed.

Bird says major third-party delivery companies have gotten onboard with the bill in recent months.

In a statement, DoorDash told Denver7, "We know that each merchant should have the power to make choices affecting their business. We commend efforts to both support local merchants and ensure that they are heard.”

In a blog post from last year, the company announced it would no longer be adding new restaurants to its platform without prior consent and will take down any restaurant's listing that does not wish to be featured on the platform within 48 hours. GrubHub did not respond to Denver7's request for comment.

It took two weeks, numerous phone calls and emails, attorney involvement and a cease-and-desist letter for Marin to finally have her business removed from the platform.

It took another two weeks to get rid of her listing, a GrubHub subsidiary, and to change her Google listing so that orders would go back through her website, not a delivery service’s.

“I got really protective over Suga Me Sweet in the process. This is my baby and kind of felt like someone had kind of violated my child,” she said.

Marin now regularly monitors those websites and others to make sure she’s not listed.

The state Senate passed the bill in late April with bipartisan support. It also cleared the House Wednesday on a 42-21-2 vote. It needs one more procedural vote in the Senate before heading to the governor’s desk for his signature.

If it is signed, the bill would immediately go into effect.