“Are food delivery apps helping or hurting our favorite local restaurants?”
Approaching dinnertime on yet another Friday night, you might be feeling too lazy to leave the house to grab your favorite takeout food. After a quick perusal of UberEats, you’ve guaranteed a delicious dinner will land on your doorstep within 30-40 minutes. By hitting the submit button, the food will arrive along with several extra UberEats fees that will hit your credit card for this uber convenience (no pun intended). But can it really compare to the cost restaurants owners are being forced to pay to have access to this service?
Caitlin and Daniel Cutler, owners of Ronan, an Italian restaurant on Melrose Avenue in LA, have definitely felt the impact – having spent a whopping $35,000 last year on food delivery service fees. According to an interview in the Los Angeles Times article, “The next time you order takeout, call the restaurant,” this represents one-third of a year’s rent at their restaurant. Owner Caitlin posted on Instagram to make her customers aware of the steep cost, realizing that some patrons may not understand the impact that these delivery app services are having on independent restaurants.
“We just got our year-end financials back. Not only did we lose money (a given, pandemic and all), but to add insult to injury, we spent $35,000 on delivery service fees this year,” Caitlin said on Jan. 12.
Of course, we’ve all heard of the big three apps and many of us even rely on them daily: UberEats, GrubHub and Doordash. In California, Postmates is another popular service, along with so many newcomers that seem to be trying to break into this sector almost daily. Of course, it’s so easy to simply turn on your phone, press a few buttons and, voila, your food magically appears on your doorstep shortly after. Most of the time the shopping bag literally appears behind your door with zero human interaction.
Many restaurant owners desperately turned to these delivery giants during the beginning of the pandemic when restaurants sales were plummeting due to Covid lockdowns. With customers staying home, they had no way to maintain their sales other than quickly turning to offering curbside pick-up and delivery options. Some restaurants that had never offered delivery service in the pre-pandemic world had no choice but to outsource their sales to a third party. It wasn’t an option for them to suddenly increase their workforce to add delivery drivers. At the time, it was better than having to close their doors. But now, it seems like these delivery apps are here to stay. And now, local customers have gotten far too used to this convenience.
And this problem is not just in LA – it’s being felt by restaurants all over the country. The New York Times reporter Jeffery C. Mays published an article on Sept. 10, 2021 , ”Food Delivery Apps Sue New York Over Fee Limits.” In it he interviewed Andrew Rigie, the executive director of the New York City Hospitality Alliance. “This is all part of a very sophisticated approach billion-dollar companies use to redirect consumer purchases through their channels so they can control the marketplace,” Mr. Rigie said. “Restaurants feel they can’t afford to be on the platform but they can’t afford to not be on the platform.”
Business has gotten so tough that even larger franchise companies have recognized the impact food delivery apps are having on the profitability of small independent restaurants. Last November 2021, pizza giant Domino’s launched a new ad campaign urging consumers to “support local” in an effort to help support its peer local establishments that have been hurt. They’ve even given out $100 gift cards to small restaurants in an effort to show their support.
The astronomical fees restaurants must pay to sometimes multiple delivery services are forcing restaurants to increase the price of items on their delivery menus in order to recoup some of their lost profit. Unfortunately, this passes part of the fee onto the consumer. So both restaurants, and their patrons, are at the losing end of this widely used business platform.
On the other side of this dilemma is the growth we’ve seen in the employment rates for gig workers. Employment for these independent workers has grown exponentially in the past few years. Delivery workers appreciate these jobs for the flexibility it offers them, often allowing workers to gain supplemental income without having to commit to the defined hours of a job (think part-time workers, students, stay-at-home moms).
Ease and instant gratification are a part of our now and our future. This widely used platform definitely has its place but it’s also clear that both restaurants and their patrons are paying the price for this benefit. Of course delivery apps are here to stay. But we’re hoping that you might think twice before you hit that submit button and make an effort to go pick up the food more often – leaving those times you use the apps to when you’re in a real time crunch or too busy to spend all day watching your sauce slowly simmer since you’re back to full-time parent driving mode or work in office (even if it’s hybrid!).