A recently published article by Business Insider dove into the realities of the 3rd-party food delivery platform business. It was revealed that although these delivery platforms claim to be allies of the hospitality industry, most charge restaurants as much as 30% per order as commission and some are being accused of not paying eateries for delivered food in a timely fashion. Now that dine-in is no longer permitted throughout most of the country, many more people are using third-party food delivery services like Uber Eats, DoorDash (it should be noted this company slashed fees for restaurants by 50% through the end of May), GrubHub, Postmates, Seamless, and others.
“It’s hard as an operator to not be tempted to sign up,” said Han Tran, the proprietor of San Diego restaurants, Ebisu Sushi in Hillcrest and Shank & Bone in North Park. “Their reps are constantly hounding us via phone, email, and social media messaging. And diners are always asking for it often not aware of the cost and risk on our end. I 100% understand the demand and convenience for delivery. I’ve used it myself. It’s important that consumers are more aware of the business dynamics and hopefully this will bring that to light.”
In the B.C. time, orders through these companies may have only been a small portion of a restaurant’s overall sales, but they have drastically increased as forced stay-at-home mandates continue. This has given such companies more power as restaurateurs find them a necessary evil in a struggle to survive. According to The Guardian, Grubhub alone has reportedly received up to 15 times the usual number of memberships, while at the same time resorting to what some think are unscrupulous practices.
“Grubhub in particular has come under fire recently for its ‘Supper for Support” promotion, which offers discounts to customers in the purported interest of supporting restaurants,” wrote author Irene Jiang. “However, in order for a restaurant to participate in the promotion, it must first sign a contract stating the restaurant will pay the total cost for the discount, and pay Grubhub a pre-discount processing fee for orders. Grubhub has also asked its customers to oppose an order by San Francisco Mayor London Breed that mandates delivery services to slash their fees in half.”
Some cities, like San Francisco and Seattle with New York City and Los Angeles on track to follow suit, are limiting what these services can charge in an attempt to protect the struggling restaurant industry from being gouged by exorbitant fees. The restaurant industry is one of the county’s business sectors most negatively affected by precautionary measures put in place to battle the COVID-19 pandemic. Industry experts like Top Chef judge and New York City-based restaurateur Tom Colicchio warn that 75% of independent restaurants in the U.S. may not reopen without more assistance.
Anderson also asked GrubHub to remove them from being listed on their platform. They did not, but they did change the status of Common Stock’s listing to “Closed” when viewing the hours of operation. Common Stock remains open 11:30am to 8:30pm daily (9pm on Saturday nights). Their food is awesome and they’re doing great stuff for the community. Support them.
Common Stock is one of many restaurant owners who have been put on delivery apps and websites without the owner’s permission. A Fox Business article from January 2020 B.C. revealed that some delivery apps were putting restaurants on its apps and websites without an owner’s permission by accepting orders from customers and placing them on their behalf by calling the restaurant or sending a driver to place one in person. Numerous lawsuits against these companies have been filed.
“We’ve been getting a ton of orders through our third-party delivery services, however they all take 30%,” said Emily Green Lake, the owner of Sisters Pizza in San Diego’s Hillcrest. “Our philosophy is ‘we are getting 70% of sales we wouldn’t have without them’, but if guests transition to picking up or allowing the restaurant to deliver, we would be much better off. Furthermore the logistics with third party deliveries are often off. We’ll let the delivery app know there is a 30 minute wait for pizza and the driver shows up in 10 and is upset when the order isn’t ready. Some drivers have left and the app takes a while to reassign a driver, and consequently the food isn’t delivered in a timely manner and it makes my business look bad. I’d love a better system however we are not in a position to hire a delivery driver so we’re stuck between a rock and a hard place.”
So should we delete delivery apps entirely? That is not exactly what I’m advocating, rather my goal is to inform people so they are aware on how these companies operate and limit the use of them whenever possible. Believe me, I understand the appeal of convenience, but in such an unprecedented time when so many businesses are struggling, maybe we can resort to patronizing restaurants directly. Myself, upon learning about the inner working of the business model and how restaurants are being charged, I have chosen to no longer use these delivery apps.