Last week Giuseppe Badalamenti, restaurant consultant and owner of Chicago Pizza Boss, released a Grubhub receipt from an anonymous restaurant he works with on Facebook. The restaurant earned around $ 1,043 from 46 orders through Grubhub, but after various rates and promotions, it only took home $ 377.
The post went viral, with more than 6,000 Facebook shares as of Thursday. “I had seen some GrubHub receipts from other customers, but this one was just outrageous,” Badalamenti told CNET.
Coronavirushave spiked in , including the use of third-party applications such as , as more people stay and try to support local restaurants that have closed their doors, except for take away and deliver. However, many customers don’t realize that these apps charge high restaurant fees, generally 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; If a customer does not see a local restaurant in any of the applications, they can assume that it is not open or does not make the delivery, and comes up with another option that is there. Applications can also free up staff and reduce ordering errors, and prevent customers from skipping a check, Badalamenti said. But especially in the midst of the pandemic, delivery service fees are driving down already diminished profits, even as apps have slashed fees in recent months.
“People use these apps under the assumption that everyone is getting a fair shake,” said Badalamenti. “And a lot of people are taking advantage because they think they need to play this game.”
The truth about shipping costs
Major delivery apps like Grubhub, DoorDash, Uber Eats, and Postmates charge restaurant fees in different ways, often depending on the individual restaurant and the services they choose to use. For example, in the receipt that Badalamenti published, $ 362 of the charge to the restaurant was promotional within the application and one that offered $ 7 discount on orders, which the restaurant decided to make.
“Restaurant owners select the services they want and only pay a commission to Grubhub when we help generate sales,” according to a Grubhub statement. “Grubhub is pleased to work with restaurant partners to help them manage costs and grow their business.”
The fees charged by these companies cover delivery costs, operations and other customer service, among other things.
Amid the coronavirus pandemic, some of the delivery apps have made efforts to help local restaurants. But some have been received with more praise than others.
In March, DoorDash cut its commissions from local restaurants by 50% on DoorDash and Caviar delivery apps. From mid-March through April, independent restaurants can register on both platforms for free and pay zero commission for 30 days, without being asked to pay anything. Existing DoorDash and Caviar partners were not offered any commission on pickup orders. In April, the company announced that it would reduce commissions for all local restaurants by 50% through May.
For Uber Eats, the commission is based on factors like the volume of the restaurant. The company waived the commission on all pickup orders and reduced fees on orders where restaurants use their own delivery men to 15%.
GrubHub temporarily suspended up to $ 100 million in commissions for independent restaurants in March. However, those rates are only those related to marketing (what restaurants pay to appear on the platform); Other fees like delivery and order processing still apply.
“Even before the coronavirus started, these third-party delivery apps were already hurting restaurants because the rates were so high,” said Erin Wade, owner of six restaurants in New Mexico and Austin, Texas. “Customers love restaurants in their community and think they are supporting them when they place an order [through a third-party delivery app]Wade said. The rates “are a real shock to people.”
The apps provide a delivery service to restaurants that would not otherwise have one, said Antonio Ferraro, owner of Napoli Pasta Bar in Washington, DC. “On a rainy night or on weekdays when I don’t offer delivery, it might help a little,” said Ferraro. “Your name is out there, and people know you’re open.”
Despite commission fees, it’s sometimes worth using third-party apps to keep doors open, said Octavio Díaz, owner of Agave Uptown in Oakland. “At the end of the day, you may not make money, but you have your staff working,” Díaz said.
Cities have also stepped in to try to limit delivery service fees during the COVID-19 crisis. In April, San Francisco and Seattle approved emergency orders requiring delivery applications to limit restaurant fees by 15%. Similar legislation has been discussed in New York City, Washington, DC, Los Angeles, and Chicago.
Restaurants are looking for other technological solutions to stay alive.
Unless third-party delivery service rates drop to between 5% and 10%, it will be difficult to maintain its use, several restaurant owners said.
Meanwhile, many are looking for other technology options to reach customers and keep the doors open during the pandemic and beyond.
Diaz’s Agave Uptown is a 149-seat restaurant in an Oakland corporate area, where almost all seats are full during lunch hours Monday through Friday. Before the pandemic, the restaurant used GrubHub and Caviar for delivery. The rates were “between 28% and 30%,” Díaz said. “We are basically giving away our winnings.”
Since then, the restaurant has started using Ordrslip, a service that designs an app to work with the restaurant’s point of sale system for a fixed monthly fee. Now, Díaz puts flyers in every bag that third-party delivery companies pick up so customers know that the restaurant has its own application and ordering option.
Mark Mizer, owner of the Seattle-based Thai restaurant Buddha Bruddah, recently started using the BentoBox service, which helps create a website and receive online orders directly from customers.
The restaurant saw more than $ 50,000 in online orders in April. “The community wants to help local businesses survive and they will order you directly for delivery if they have a choice,” Mizer said.
How to support your local restaurants
All restaurant owners interviewed for this story agreed: When possible, the best way to support your local restaurants is to call in an order or place one directly through the restaurant’s website or app. Local restaurants are likely to offer pick-up service and may have an internal delivery service. They may also have a wider selection and discounts not available in the delivery app, said Rena Dongparteep, co-owner and chef at Shiitake Bistro Asian fusion restaurant in Delray Beach, Florida.
Placing an order directly can also save you some cash, as additional charges and fees are usually added to the tab when ordering via general delivery apps.
When you place an order, leave a comment and tag the restaurant on social media to help spread the word, Dongparteep added.
Of course, there are warnings for people who are sick or in quarantine and cannot leave the house. But even then, you can check local delivery services to keep money in the local economy, Wade said.
“When this is all over, what restaurants need most is for people to go back and eat at restaurants,” Wade said. “That is what we are prepared to do. We are not prepared to be a McDonald’s that serves wrapped foods in large quantities around the world.”
Maintaining that direct relationship with restaurants is important again, he added. “It is the way the business has run for a long time,” Wade said. “And now there are all these intermediaries between us and our guests. And that has made the business that much more difficult.”