GrubHub COO Stan Chia took the stand today in the company’s trial surrounding its practices of employing 1099 independent contractors to make deliveries.
In Chia’s testimony, GrubHub lawyer Theodore Boutrous focused on the element of the Borello test — which aims to determine if a worker is an independent contractor or W-2 worker — that looks at whether or not delivery is part of the company’s core business. According to Chia, delivery is not part of GrubHub’s core business and it never has been.
When asked if GrubHub considers itself to be a “food delivery company,” Chia responded, “No, we do not.”
“It is still to be the premiere marketplace connecting diners with restaurants,” Chia said.
Chia spoke about the value of GrubHub as a marketing and discovery tool for restaurants, noting how GrubHub enables diners to discover restaurants they wouldn’t otherwise know about.
GrubHub began offering delivery as a service to restaurants in 2014, ten years after it first launched. At that time restaurants were required to use their own staff to do deliveries. Restaurants are also able to offer pick-up services through GrubHub. In 2015, GrubHub began offering delivery as a service to restaurants.
GrubHub acquired Seamless in 2013 and Eat24 just last month — two companies that also facilitate on-demand delivery. Still, Chia said the company is focused on the marketplace aspect of the business and is “not proactively trying to grow” the delivery portion of the business.
He went on to talk about GrubHub’s business in California, and how GrubHub only facilitates delivery in five of the 200+ markets in which its active. He said the delivery portion makes up a minority of GrubHub’s overall business.
In fact, he said “we lose money and we cannibalize our profits on the delivery portion of the business.”
On the other side, the plaintiff’s lawyer, Shannon Liss-Riordan, is focusing on a different element of the Borello test. She’s trying to prove that GrubHub had a certain amount of control over its drivers.
Yesterday, a former GrubHub W-2 employee focused on driver acceptance rates, priority scheduling and “ghost orders.” Liss-Riordan’s theory is that those tactics were used to control GrubHub drivers.
Chia is still on the stand, so this story will develop throughout the day.
Featured Image: GrubHub