A few weeks ago, Giuseppe Badalamenti, a restaurant consultant and owner of Chicago Pizza Boss, posted a Grubhub receipt from an anonymous restaurant he works with on Facebook. The restaurant made about $ 1
The post went viral, with over 6,000 shares on Facebook as of Thursday. "I had seen GrubHub receipts from other customers, but it was just outrageous," Badalamenti told CNET.
Coronavirushave led to spikes in including the use of third party apps such as ] more people stay in and try to support local restaurants that have closed their doors, except for takeout and delivery. However, many customers don't realize that these apps charge hefty fees for the restaurants – usually between 15% and 30% of the total order price, according to several restaurant owners interviewed for this story.
Restaurants choose to work with third party delivery apps to access their millions of users – as a customer that doesn't show a local restaurant in any of the apps, they can assume it's not open or not delivering, and go with another option out there. The apps can also free up staff and reduce ordering errors and prevent customers from skipping a check, Badalamenti said. But especially during the pandemic, delivery costs cut cuts that have already fallen – even if apps have cut costs in recent months.
"People use these apps on the assumption that everyone gets a fair shake," Badalamenti said. "And a lot of people are abused because they think they should play this game."
The Truth About Delivery Costs
The best delivery apps like Grubhub, DoorDash, Uber Eats and Postmates charge restaurants commissions in different ways, often depending on the individual restaurant and what services they decide to use. For example, in the receipt that Badalamenti placed, $ 362 of the cost to the restaurant came from promotion within the app and one that offered $ 7 off orders – which the restaurant chose.
"Restaurant owners select the services they want and only pay commission to Grubhub if we help generate sales," said Grubhub. "Grubhub likes to work with restaurant partners to help them control costs and grow their business."
The costs collected by these companies cover the costs for deliverers, operations and other customer service, among others.
Amid the coronavirus pandemic, some delivery apps have made an effort to help local restaurants. But some have been praised more than others.
In March, DoorDash reduced local restaurant commissions by 50% for both DoorDash and Caviar delivery apps. From mid-March through April, independent restaurants were able to sign up for free on both platforms and pay zero commission for 30 days, without having to pay anything back. Existing DoorDash and Caviar partners received no commission for pick-up orders. In April, the company announced it would cut commissions from all local restaurants by 50% through May.
For Uber Eats, the commission is based on factors such as restaurant volume. The company waived commission on all takeout orders and lowered the cost for orders where restaurants use their own delivery drivers to 15%.
GrubHub temporarily suspended up to $ 100 million in commissions for independent restaurants in March. However, those costs are only those related to marketing (what restaurants pay to appear on the platform) – other costs such as delivery and order processing still apply.
"Even before the coronavirus started, these third-party delivery apps hurt at restaurants because the costs were so high," said Erin Wade, owner of six restaurants in New Mexico and Austin, Texas. "Customers love their community restaurants and think they support them when they place an order [through a third-party delivery app]," said Wade. The fees 'are a real shock to people'.
The apps provide a delivery service for restaurants that might not otherwise have one, said Antonio Ferraro, owner of Napoli Pasta Bar in Washington, DC. & # 39; On a rainy night or weekday that I don't offer delivery it can help a bit & # 39; said Ferraro. & # 39; Your name is known and people know you are open. & # 39;
Despite the commission costs, third-party apps are sometimes worth keeping the doors open, said Octavio Diaz, owner of Oakland's Agave Uptown. & # 39; You may not make money in the end, but you have your staff at work & # 39 ;, Diaz said.
Cities have also intervened to try to limit delivery services during the COVID-19 crisis. In the past month, San Francisco, Seattle, Washington, DC andhave taken emergency orders requiring delivery apps to limit restaurant costs to 15-20%. Similar legislation has been discussed in Los Angeles and Chicago.
Restaurants are looking for other technical solutions to stay alive
Unless third-party delivery service costs drop to something between 5% and 10%, it will be difficult to keep using them, several restaurant owners said.
In the meantime, many are looking for other technical options to reach customers and keep doors open during the pandemic and beyond.
Diaz & # 39; s Agave Uptown is a 149-seat restaurant in a business area of Oakland, where almost every seat is full at lunchtime on weekdays. Before the pandemic, the restaurant used GrubHub and Caviar for delivery. The fees were "between 28% and 30%," said Diaz. & # 39; We're actually giving away our winnings. & # 39;
The restaurant has since started using Ordrslip, a service that designs an app to work with the restaurant's cash register system for a fixed monthly fee. Now Diaz is putting kites in every bag picked up by third-party delivery companies to let customers know that the restaurant has its own app and ordering option.
Mark Mizer, owner of the Seattle-based Thai restaurant Buddha Bruddah, has recently started using the BentoBox service, which helps create a website and receive customer orders directly.
The restaurant saw more than $ 50,000 in online orders in April. "The community wants to help local businesses survive and will order directly from you for delivery if they have the opportunity," said Mizer.
How to Support Your Local Restaurants
Every restaurant owner interviewed for this story agreed: The best way to support your local restaurants is to place an order or, if possible, directly through place the restaurant's website or app. Local restaurants are likely to offer takeout and may have in-house delivery services. They may also have a wider selection and discounts not available in the delivery app, said Rena Dongparteep, co-owner and chef of the Asian fusion restaurant Shiitake Bistro in Delray Beach, Florida.
Ordering directly can also save you some money as additional fees and charges are usually added to the tab when you order through the general delivery apps.
When you place an order, leave a review and tag the restaurant on social media to help spread the word, Dongparteep added.
Of course there are caveats for people who are sick or quarantined and cannot leave the house. But even then, you can check on local delivery services to keep money in the local economy, Wade said.
"When all this is done, restaurants are most in need of people who come back to eat at restaurants," Wade said. "That's what we're going to do. We're not set up to be a McDonald's serving plentiful packaged food in the world."
It's important to maintain that direct relationship with restaurants, she added. "That's how the company has been working for a long time," Wade said. & # 39; And now there are all those middlemen between us and our guests. And that has made things a lot more difficult. & # 39;