Jimmy Donaldson, better known as MrBeast, and the ghost kitchen company behind his virtual burger restaurant chain are trading barbs in a legal battle that will decide the fate of whether MrBeast Burger operates under the YouTube megastar’s brand.
In a suit filed on Monday in New York state court, Virtual Dining Concepts claims Donaldson breached his contract by publicly criticizing the chain and failing to follow through on a series of alleged commitments to grow the business. It says the YouTuber is looking to “torpedo the brand” after his attempts to seize total control of the venture were rebuffed. “Donaldson’s baseless and unlawful disparagement had the intended effect: 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, causing damages to Plaintiffs that, according to the evidence and Donaldson’s own statements regarding the value of MrBeast Burger, are in the nine-figure range,” states the complaint.
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VDC sued after it was hit with a suit last month from the YouTube star’s Beast Investments alleging that the ghost kitchen company “tarnished” Donaldson’s reputation with bad food and poor customer service. It was accused of focusing on rapidly expanding the business as a “way to pitch the virtual restaurant model to other celebrities,” which led to “low quality products to customers that are delivered late, in unbranded packaging.”
Donaldson wants to terminate MrBeast Burgers as VDC looks for a court order that he doesn’t have the right to do so. They both point to alleged breaches in their contract.
In exchange for becoming the face of the virtual restaurant brand, Donaldson received a share of revenue and later negotiated a stake in the business, according to the complaint. But as the chain boomed in popularity, VDC says the YouTuber and Beast Investments “schemed to exploit their leverage and renege on their agreements in an effort to seek a better, more lucrative deal” by lying about a number of alleged breaches.
“For example, Donaldson latched onto various complaints about the burgers themselves as a breach of contract—it was not,” states the complaint, which notes that bad reviews are customary for any restaurant and that the “overwhelming majority of customers were highly satisfied.”
After Donaldson refused to withdraw a threat to terminate his agreement with the company, he took aim at the MrBeast Burgers in a series of social media posts, according to the suit. He posted on Twitter in June, “If I had to ability to close it, I would have done so a long time ago sadly.” In response to a complaint from a customer, he said, “It’s impossible to guarantee the quality of orders with virtual restaurants. Hurts my soul to see orders messed up. Sadly I can’t get out of my contract with BB.”
In his suit, Donaldson describes “quality control problems” that produced food that was allegedly at times “inedible” amounts to a breach of contract because it hurt his reputation. He also points to VDC improperly registering various trademarks throughout the world using his name and brand without his consent in addition to failing to create a jointly owned company to further the venture and transfer shares in the business pursuant to their deal. “While this business has made millions of dollars, MrBeast has not received a dime,” the suit reads.
Responding to the allegations, VDC says the trademark applications were for MrBeast Burger and were “therefore jointly owned by the parties.” The company argues that Donaldson “willfully failed to finalize and blocked the necessary corporate paperwork to create” the company that would be assigned the chain’s trademarks. Additionally, it claims that it gave the YouTuber’s his shares last year.
“But for Donaldson’s opportunism, MrBeast Burger would have continued its explosive growth,” write Mathew Rosengart and Richard Edlin, lawyers for VDC, in the complaint.
The complaint claims failures to comply with contractual obligations, making misleading and disparaging statements, breach of the implied covenant of good faith and fair dealing and tortiously interfering with VDC’s contractual relationships and prospective business advantages.
MrBeast Burger launched with a North Carolina pop-up restaurant in 2020 to great fanfare. It expanded to over 1,700 locations in more than 45 states and 10 countries. The business operates as a virtual brand that partners with kitchens and existing restaurants for food delivery and pick up services. Donaldson, known for his splashy acts of charity on social media with more than 174 million subscribers on YouTube, has described the business as a “philanthropic mission” to “help thousands of restaurants bring in revenue during the pandemic that they would not otherwise have been able to do.”
Celebrities that have partnered with VDC, cofounded by Planet Hollywood chief executive Robert Earl, include Mariah Carey, Tyga and Mario Lopez.
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