Legal Teardown: Who has the most restaurant-friendly terms of service?
Legal Teardown: Who has the most restaurant-friendly terms of service?
We ordered pizza and compared legal documents.
Hello Superfood gang,
I invited 3 talented lawyers to order some pizza and help me decode and rate the terms of service of popular food delivery apps and restaurant operating software in the US.
Here’s the lowdown.
About Us
Hi, we’re Shubham, Kannan, and Vishvesh. We are final year law students at National Law University, Delhi. We have worked on several policy research projects in our time at law school that involve analysing data protection laws and policies around commerce*. Plus, we’re foodies and so are naturally excited to take on this #teardown to analyse the evolution of the food tech industry.
Why Does This Matter?
TLDR: Whoever owns their data and customer relationship wins.
Here at Superfood, we have a consistent theme and conviction — that food will follow retail. We’re in the nascent stages but early clues are here. As @post_market notes, these two factors were important reasons for Nike’s success.
The Ideal Data Policy: ‘My Data, Our Customers’
Virtual kitchens and food delivery apps will democratise the ability to start restaurants and chains. Chefs will start a long tail of diverse, creative restaurant concepts. National chains will face competition from ambitious local restaurants leveraging tech to expand into new locations.
The success of these food entrepreneurs and more broadly, local restaurants in the 2020s will ultimately turn on how well they use and protect their data.
Today, the data is mediated by two categories of tech companies:
Food Delivery Apps (B2C): Think Amazon for restaurants.
Your favourite food delivery app falls in this category. Similar to Amazon, they allow both customers to order food as well as sellers (restaurants) to list their products. Eg., Uber Eats, Doordash etc.
Restaurant OS (B2B): Think Shopify for restaurants.
Combines all the software needs like point of sale, front of house, back of house, and digital storefront into one suite of products allowing restaurants to easily manage their delivery operations. Eg., Ordermark.
We picked 9 platforms, compared them against 4 criteria and scored them.
Which Are The Most Restaurant Friendly Terms?
The ideal restaurant data policy will incorporate the following features:
Terms are publicly accessible and easily readable? (i.e., English not corpus juris)
Restaurants own their order data (what was ordered? when?) and co-own customer data (who ordered it?)
Restaurants should be able to use/share/monetise the order data as they see fit
Platforms can use restaurant data for a narrowly defined set of purposes
Results Are In…
Accessibility: Platforms should make their merchant agreement easily and publicly accessible on their website. UberEats does best, making terms easily available on one webpage; while GrubHub scores the lowest — expecting the restaurant to submit tax receipts before accessing the latest agreement. We’ll save you a few clicks - here are their updated terms.
Readability: Platform agreements need to be simplified and stripped of legalese where possible. Doordash was the most complicated as it involved reading several clauses together to understand the restaurant's rights and obligations. In contrast, Postmates was simpler and included a wtf-does-that-mean-in-English? decode against every section of the agreement.
My favourite:
Force Majeure: What happens if the earth opens up and swallows us?
Data Ownership: Restaurants should exclusively own all order level data even if the platform collected the data on behalf of the restaurant.
Delivery Platforms. Postmates allows restaurants to exclusively own all their order data, while Grubhub not only claims ownership over the order data but also may require that the restaurant delete the data upon request (LOL WTF).
Restaurant OS. Otter and Ordermark tie for the best treatment of restaurant data, letting the restaurant own the data but taking a limited license to use the data for a list of defined purposes. Toast scores lowest here making the restaurant data exclusively their property.
Restaurant’s rights over their data. Restaurants should have an unfettered right to use and commercialize the order level data.
Delivery platforms. Postmates sets the gold standard by allowing restaurants to freely use or otherwise monetize their data even if it results in increased competition with Postmates. Our lovely friends at Grubhub continue to score the lowest here disallowing the restaurant from using their own data.
Restaurant OS. Otter, Ordermark and Chowly score equally by allowing restaurants to freely use their order data for any purpose (in accordance with law) including to compete with these platforms. On the other hand, Toast is more onerous as it allows restaurants to use the data as long as it obtains the eaters’ consent to do so (difficult if not impossible for the restaurant to do).
Platform’s rights over Restaurant data: Platforms should use and analyse the data it collects for a narrowly defined set of purposes (e.g. if the platform uses it or shares it with third parties, they should explicitly seek the consent of the restaurants).
Delivery platforms. Postmates scores high again. They may not use order data to benefit a restaurant's competitor or in a way that identifies the restaurant as the source. Grubhub, Uber Eats and Doordash all reserve the right to use the data as they see fit.
Restaurant OS. Otter and Odermark scored highest here by allowing themselves to only use aggregated or anonymized data. Chowly scored lowest because of an expansive clause giving them the right to use restaurant data for any “commercial purposes”.
Click here to see the detailed grid of the terms we used to compare. If we missed something, please feel free to leave a comment.
Takeaways for Restaurants
Questions to ask your platform. When you’re getting onboarded a new platform or speaking with representatives of your current platforms, here’s some questions you can send them that can help clarify your rights under the agreement.
Do I own and have access to my order data and analytics? What is included in that data set? (eg., what was ordered, when it was ordered etc.)
Do I own and have access to my customers’ contact information (telephone, address, profile, email, etc.)?
Do you need my consent to share my data with a third party?
Are there any restrictions on how I use the data shared with me?
Do you have to delete my data upon my request?
#Failwinds from Retail…
Terms of service are not just boilerplate terms wrapped into a document. They have a material impact on the ability for restaurants to survive/thrive in a delivery first world.
The “Amazon effect” 🚚 is credited with the decline of Main St. retail revenue, eventually leading to store closures. A WWD report cited more than 9,400 store closings in 2017, up 53% from the number that shut in the wake of the Great Recession in 2008.
Web Smith of 2PM correctly observes that the retailers are helping build Amazon’s private labels and in effect putting themselves out of business.
Amazon is harvesting consumer data to become an efficient vertical reseller. The Amazon products will continue to have the preferred place on product pages. In this way, opposing marketers’ frustrations are founded. It may be true that external brands will continue to be penalised for competing against Amazon’s private labels.
With food tech, we’re getting to redo the last two decades of retail. If platforms like GrubHub and Doordash compete with restaurants by starting their own private label brands or selling restaurant data to bigger chains, we will witness the “Amazon Effect” once again.
But the future is up to us. Having restaurant centric legal terms and tech products from Day 1 can lead to a much more creative, diverse and entrepreneurial future.
Naturally, we’re bullish on and biased toward the companies building products with only restaurants as their customers (Shopify for restaurants a la Otter, Ordermark etc.). They’re about to unleash hundreds of thousands of new restaurant concepts and brands over the next few years for a fraction of the cost.
We’ll leave you with the “Shopify effect”. 😎 Until next time…
*Response to the Report by the Committee Of Experts on Non-Personal Data Governance Framework at The Esya Centre and the Practising Patents Project at Centre for Innovation, Intellectual Property and Competition, NLU Delhi
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