- Last week, YouTube star MrBeast sued the restaurant firm behind his namesake burger brand.
- Virtual Dining Concepts fired back with a breach-of-contract suit filed Monday.
The restaurant company behind the delivery-only brand MrBeast Burger countersued YouTube star Jimmy Donaldson, aka MrBeast, on Monday, alleging breach of contract. The suit alleges that Donaldson waged a campaign to "torpedo" the online burger brand.
Donaldson used "his massive online presence to sabotage the brand," according to a suit filed by Virtual Dining Concepts and Celebrity Virtual Dining against Donaldson and his company, Beast Investments LLC. VDC filed the lawsuit in New York State Supreme Court and is seeking unspecified damages. In the suit, they say the brand's value is "in the nine-figure range."
"Armed with his celebrity and many millions of followers, Donaldson disparaged the brand and plaintiffs in a slew of highly damaging social media posts, which were quickly amplified in numerous media outlets, just as he intended," the VDC suit said.
The lawsuit comes a week after Beast Investments sued Virtual Dining Concepts alleging that VDC had ignored the MrBeast Burger Brand. In the suit, Donaldson said the "terrible quality" of the burgers was the fault of his business partner, Virtual Dining Concepts. His lawsuit came more than a month after Donaldson took to Twitter to say he was "moving on" from MrBeast Burger because he couldn't control the quality of the burger.
In its countersuit, Virtual Dining Concepts, a Florida restaurant group that develops celebrity-backed virtual restaurant brands, said Donaldson's "relentless attack" of the brand came after he failed to negotiate a more "lucrative deal" with them.
MrBeast Burger debuted in 2020 and is sold in hundreds of restaurants seeking to use excess kitchen space to earn additional revenue.
VDC said sales have declined for the burger brand as a result of Donaldson's "inability" to promote it through his social media channels.
"MrBeast Burger's reputation was materially damaged if not destroyed, customers abandoned the Brand, and Plaintiffs' hard-won relationships with vendors, partners, and suppliers were shattered," the VDC suit states. "Sadly, Donaldson's conduct has also damaged the bottom lines of hundreds of restaurants across the country and around the world."
Since Donaldson is not promoting the brand, per his contract, "sales declined and have continued to decline," the VDC suit said.
The suit also states that "prior to Donaldson's misconduct, over 1,500 MrBeast Burger locations operated in 45-plus states and Washington, DC, with approximately 200-plus locations internationally."
The company didn't reveal how many locations are currently selling the brand.
Donaldson's lawsuit alleges quality problems and mishandled orders
Representatives for Donaldson could not be reached for comment.
But, according to Donaldson's complaint, MrBeast meal orders have been plagued by issues including alleged problems with quality, including customer complaints of missing items, being served raw meat, and delivery delays.
Donaldson alleged in his suit that complaints raised to his business partner, VDC, "fell on deaf ears."
VDC said in its suit that complaints against MrBeast Burger "were relatively few in number compared to the overall number of burgers sold."
"Every restaurant gets periodic bad reviews and every company that sells product to the public has unsatisfied customers. The reality is that the overwhelming majority of customers were highly satisfied, and the product was excellent," the VDC suit said.
Virtual brands are facing growing challenges
Virtual brands grew in popularity during the pandemic.
Delivery-only menus are typically prepared inside ghost kitchens like Reef Technology, Kitchen United, or Travis Kalanick's CloudKitchens. Some restaurant chains like IHOP also prepare virtual brands inside their kitchens to boost delivery-only sales.
But these brands are experiencing a reckoning.
Uber Eats recently cut 8,000 brands from its app because some were offering duplicate menus from restaurants at the same address. DoorDash and Grubhub have also cracked down on delivery-only brands.
Dorothy Calba, a senior research analyst at Euromonitor International, said virtual brands made inside ghost kitchens are facing quality control challenges.
"The two main challenges ghost kitchens are facing are quality concerns and brand loyalty," she told Insider. "Virtual brands and other brands using ghost kitchens must do more to ensure accountability of their production centers and offer cohesive branding and menu strategy to stick out from the crowd and earn repeat orders."
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