Restaurants struggle with food delivery fees during lockdown

As Diners Flock to Delivery Apps, Restaurants Fear for Their Future
While the apps say they are saving them in the pandemic, many restaurateurs say the opposite.
NY Times June 9, 2020

(excerpt) Before the coronavirus lockdowns, Matt Majesky didn’t take much notice of the fees that Grubhub and Uber Eats charged him every time they processed an order for his restaurant, Pierogi Mountain.

But once the lockdowns began, the apps became essentially the only source of business for the barroom restaurant he ran with a partner, Charlie Greene, in Columbus, Ohio. That was when the fees to the delivery companies turned into the restaurant’s single largest cost — more than what it paid for food or labor.

Pierogi Mountain’s primary delivery company, Grubhub, took more than 40 percent from the average order, Mr. Majesky’s Grubhub statements show. That flipped his restaurant from almost breaking even to plunging deeply into the red. In late April, Pierogi Mountain shut down.

“You have no choice but to sign up, but there is no negotiating,” Mr. Majesky, who has applied for unemployment, said of the delivery apps. “It almost turns into a hostage situation.”

As Diners Flock to Delivery Apps, Restaurants Fear for Their Future

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Can we all say, “Leeches”.

Back in the day, William Howard Taft & Teddy Roosevelt served the U.S. well by busting “trusts” that were fleecing the American economy. We don’t have that vigilance today.

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That’s why I do pickup whenever I order takeout, though I know that’s not an option for everyone. Do any restaurants do their own delivery anymore, like Chinese restaurants in NYC did?

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I tried to learn of Chinese restaurants doing their own delivery, but the only response was my own contribution of Beijing Restaurant!

Many in NYC still do. From what I understand, restaurants using Grubhub or Seamless must have their own delivery people, while those participating with Doordash or Ubereats don’t. In my area (Westchester county), we have many more options available through Doordash/Ubereats than Grubhub/Seamless and I have noticed a dramatic decrease in Seamless options since corona hit - it seems that restaurants are getting rid of their dedicated delivery staff in favor of using the freelance delivery services.

There’s a change in people, many don’t care what the food tastes like as long they can order it from their phone. I recently retired from a workplace with 100 people and couldn’t believe the junk they ate.

I live in Texas and we’ve had take out for awhile and have been to several restaurants and the quality is not close to dine in. I won’t do delivery, I’m sure it’s not good and fast food delivery, yikes!! Fast food is bad enough on it’s own.

Further dumbing down of the USA.

Did anybody see the movie “Idiocracy?”

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And lots of food doesn’t travel well. I wouldn’t order fried food even for my own pickup.

We’re gradually getting a sense of which dishes from our favorite Chinese restaurants reheat well (e.g., Three Pepper Chicken) and which don’t (e.g., Bok Choy and anything). We do our own pickup.

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Surprisingly, the fried chicken sandwich I ordered from our local New Orleans place today survived OK. (Not sure I will though–it was pretty spicy.)

None of the restaurants where I am will survive doing deliveries for 30-40% of the gross bill. Most restaurants weren’t very profitable before this and now with two more layers of costs (the delivery app company and the driver) it’s a race to bankruptcy.
I stopped cooking because I want to support my favorite restaurants hoping they will survive. The smarter ones are offering 10-20% off for pickup. Some have an online system for scheduling your pickup and that has worked well. We’ll often order two days worth of food, choosing something that reheats well.
I’m not looking forward to a return to normal when I’ll have to go back to cooking some nights.

This is why I think I like cities having a say in their rules for dealing with these “unprecedented times”.

I’m originally from Queens, but at this point I have lived in the “Bay Area” longer than I lived there. To me, it was a different world.

My daughter was raised in the east Bay, has lived in Sakt Lake City, then SF, then the outer boroughs of NYC for a few years, and was here during shelter in place. She was all about delivery.

I dont get it. Our whole city is like 4 miles, maybe 25 businesses from the first buisness to the last.

Some interesting long run trends on grocery/restaurant costs:
https://www.msn.com/en-us/finance/companies/restaurants-will-be-back-i-promise/ar-BB15BGAE

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Seamless and Grubhub have to have delivery people and a comprehensive platform and cover the costs if someone absconds with the delivery.

And, of course, they’re exploiting their brand reach — that’s the monopoly part —

Interestingly, if you only want to do pickup, your cost structure is insanely lower. You need a good web app, a payment system, a tablet app for the restaurant that allows them to estimate pickup times and 86 items, but that’s all one-time software.

It seems the restaurant order management / POS vendors found they could easily leap in, or, new companies like Toast and Otter realized they could use this opportunity - if the restaurant has to put prices and dishes into an app, why not also have an online ordering for pickup facet? I see Zareen’s just put a page on Squarespace.

It looks like Rooh in Palo Alto uses Toast, for example.

I was talking to the lady at Sumika in Los Altos a couple of weeks back. They use Tock to set people order online for self pickup. They also do Grubhub, etc. for delivery at higher menu prices. I asked her if she prefers people calling her to order or Tock, and she said she far prefer Tock. I guess the fees must not be very high when the restaurants use just an order taking/ payment platform.

We ordered takeaway from a local restaurant (Lemongrass Too near Annapolis MD) and were told the same thing. They have a preferred platform and would rather we order through them than call in an order. Pick-up went beautifully - the person supervising the food runners is on the ball and is working where she can see the parking lot so she makes sure she knows what car you’re in. Contactless.

It occurs to me that the platforms reduce liability for the restaurant (reading and managing credit card data over the phone) and cut down on time for staff. Less prone to error.

“Food is a pretty good prism through which to view humanity.”

― Jonathan Gold