Yum! Brands, Inc., the American fast-food corporation that operates brands like Taco Bell, Pizza Hut, and KFC, has reportedly sued Chicago-based Grubhub Inc., claiming that it violated terms and conditions of the distribution agreement.
According to sources, the owner of KFC and Taco bell claimed that Grubhub is trying to back out of a 2018 agreement and intensely raised the prices of Taco Bell and KFC food items. In 2018, Yum! Brands signed a five-year agreement with Grubhub to deliver food from Taco Bell and KFC. The company bought a three percent stake in Grubhub for USD 200 million. The agreement required the Grubhub to offer Yum with discount pricing and favorable service for thousands of KFC and Taco Bell franchisees.
However, Grubhub terminated the agreement in this month as Yum reportedly had collaborated with competitors Postmates and Uber Eats. Later, Grubhub imposed nearly 40 percent more fees on Taco Bell and KFC after telling Yum that they had breached the contract.
In a letter to Yum, Grubhub’s CEO Matt Maloney stated that Yum’s collaborations with Postmates and Uber Eats violated terms of the deal. However, Yum has denied Grubhub’s allegations.
According to sources, Yum filed a lawsuit on June 11, in New York County’s Supreme Court alleging that Matt Maloney inappropriately terminated the company’s contract with Yum on June 2. Moreover, Grubhub’s improper efforts to back out from the deal and to make profits would cause huge harm to consumers at a time when they can least afford it. Yum also demanded Grubhub to revoke its termination of the agreement and enter into negotiations.
The lawsuit filed by Yum comes a day after Just Eat Takeaway.com NV inked a merger agreement with Grubhub for USD 7.3 billion, creating one of the largest meal-delivery companies in the world as COVID-19 pandemic accelerates a surge in orders.