Shake Shack is the target of a proposed class-action lawsuit in California charging the fast-casual chain with deceptive advertising for not disclosing delivery fees earlier in the online ordering process.
The lawsuit potentially exposes what could be seen as a lack of clarity in California’s price transparency law, which was amended last year. The Consumer Legal Remedies Act largely exempted restaurants from disclosing certain non-mandatory fees from advertising or listed prices, like voluntary tips or optional delivery fees. But the amendment still leaves questions unanswered about how and when certain fees should be revealed to consumers.
Plaintiff Aviva Copaken sued Shake Shack on Dec. 16 first in Superior Court for Los Angeles County. But the case, a proposed class action, was moved to the U.S. District Court of Central California in February.
Copaken alleges that Shake Shack is deceptive in disclosing prices on delivery orders becauseprice totals are “drastically altered” by the time the final payment screen populates. At that point, consumers are surprised with both a “courier fee” and “service fee,” the lawsuit states.
The plaintiff ordered food from Shake Shack in November using the website. Her cart total was $21.67, until the payment page indicated a $2.17 service fee and $3 courier fee.
The complaint alleges that the fees are not disclosed until the final step in the process, and that Shake Shack represents its delivery fee as just $1.99, without disclosing earlier that the courier fee and service fee will be added in addition.
“Hundreds of thousands of Shake Shack customers like Plaintiff have been assessed hidden fees for which they did not bargain,” the lawsuit alleges. “By unfairly obscuring its true costs, Shake Shack deceives consumers and gains an unfair upper hand on competitors that fairly disclose their true prices and fees.”
Shake Shack did not immediately respond to requests for comment.
The lawsuit describes Shake Shack’s online ordering process as a classic case of “drip pricing,” a term used to describe how consumers tend to fix on the price they first encounter, even after they learn the total cost. By the time they see the full price, they tend to go with it, rather than start over and shop around.
California’s Consumer Legal Remedies Act was amended last year to make drip pricing illegal, saying advertised prices must fully disclose up front what a consumer will be asked to pay.
Restaurants, however, are seen as largely exempt—so long as any mandatory fees are “clearly and conspicuously” displayed.
But while the amendment went into effect in July 2024, the technical aspect of what constitutes “clear and conspicuous” disclosure doesn’t go into effect until July 2025.
Attorneys say there is still a need for clarity on compliance.
Third-party delivery providers have been the targets of lawsuits involving delivery fees in various jurisdictions in recent years, prompting the providers to create more transparency.
Grubhub in December agreed to pay $25 million to settle a lawsuit brought by the Federal Trade Commission, or FTC, and Illinois’ attorney general that accused the company of misleading customers about the cost of delivery.
Under the Biden Administration, the FTC adopted a junk fee rule to prohibit what it called bait-and-switch pricing and other tactics to hide total pricing. The rule, however, was narrowly focused on short-term lodging and live-event ticketing services, and not restaurants.
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