The DoorDash grocery delivery app is demanding $ 7 million in damages from its partner, software company Olo. He accuses him of breaking a contract and fraudulently overloading him.
Olo is a software company that helps restaurants like Shake Shack and Chili’s manage their online orders. The company went public on the New York Stock Exchange in mid-March, expanding its presence at a time when online grocery ordering is soaring. The stock rose 39% on day one. However, Olo’s shares fell 7% on Wednesday, falling to their lowest level since their debut at one point, as more details of the DoorDash litigation were revealed in court filings in the New York State Supreme Court on Tuesday.
DoorDash told the court it was overwhelmed by Olo, who had promised the delivery app that its fees “would never be higher than the fees charged by any other delivery platform provider.” The two companies entered into a partnership in 2017. Since then, the delivery app has made up almost 20% of Olo’s sales. This contract runs until March 2022.
“In order to maximize the income for the IPO, Olo has defrauded its largest business partner,” said DoorDash in the legal document.
DoorDash claimed it found it was cluttered after acquiring another grocery supplier, Caviar, in 2019.
When DoorDash allegedly confronted Olo with evidence of these violations, it said that Olo told the company that the clauses “simply disappeared after six months through a minor amendment that only deals with the fees themselves, and that DoorDash never had a right to those had lowest fees “.
Olo also previously claimed that caviar is not a competitor to DoorDash because Caviar restaurants’ customers are in a higher price range than DoorDash’s.
Olo disclosed the disagreements between the companies in his S-1 filing with the Securities and Exchange Commission in February. DoorDash is said to be seeking “more than $ 7.0 million in damages.”
On Wednesday, Olo said, “DoorDash’s allegations are unfounded.” It declined to comment on the ongoing litigation, saying “the evidence speaks for itself”.
The Financial Times was the first to cover the recent filing of DoorDash in court.
