Are restaurants benefiting from To-Go services?
After covid affected restaurants across the country, owners began relying on delivery and pick-up orders as a main source of income. For many restaurants, food delivery apps introduced small businesses with more customers.
But partnering with third-party services can be costly. Before the pandemic, owners tried showing customers how expensive convenience is while getting food delivered in the modern day. Since these platforms are relevant during the pandemic, that harsh reality is more clear.
Chicago pizza owner Giuseppe Badalamenti shared a statement from Grubhub, (a popular food delivery app). The viral post revealed one of Badalamenti’s clients bringing in $1,042.63 in orders but only pocketing $376.54 after fees.
“Stop believing you’re supporting the community by ordering from a 3rd party delivery company,” Badalamenti wrote.
“I shared the post out of outrage for the client. There’s been a silent rumbling for three years and restaurants have been suffering,” Badalamenti told TODAY Food. He advises clients who want higher pay to not use third-party platforms.
Do most apps take nearly 65% of restaurants’ profits?
A representative for Grubhub confirmed the statement’s authenticity and broke down the costs. He said, while most restaurant partners pay 15-25% in fees, Grubhub opted to have $231 deducted from its profits to apply towards promotions. These are optional sales coupons that a restaurant may offer its customers. This restaurant charged a 10% delivery fee (optional), plus a 20% marketing package. Before the promotion fee was deducted, the take home pay would’ve been $607.54, around 57% of the original order.
Are delivery services supporting restaurants during coronavirus?
Remember the saying, “You have to spend money to make money.” Well, as restaurants continue to struggle during this pandemic, fees associated with these services are receiving more criticism.
Recognizing that restaurants and their employees are dependent on delivery services recently, people want a cap on how much commission third-party apps can get.
The mayor of Jersey City signed an executive order capping all commissions on third-party delivery apps to 10%. In San Francisco, Washington, D.C. and Seattle, similar orders passed. Their capping commission is now 15%. Recently, Los Angeles Councilman proposed that delivery apps require to charge “no more than 15% of the purchase price per order in fees during the pandemic,” said the Los Angeles Times.
New York, Boston and Chicago also considered implementing similar guidelines, but hasn’t applied to companies nationwide yet.