Yes, the commission for pickup orders is usually 8-15% and some of the platforms have been offering 0% for pickup orders since the beginning of COVID.
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Wow - 8-15% is a lot for basically doing nothing.
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Would you agree that a good number of people go to the Uber Eats app without knowing exactly which restaurant they want to order from? If so, then I think it is understandable to charge a fee to market the restaurant to the Uber Eats users.
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I’m going to have maybe an unpopular opinion on this. While on the surface, it may seem like they are charging 8-15% for basically doing nothing, they created a platform for restaurants to get business that they would not otherwise have. Restaurants have to look at it as marketing and customer acquisition costs. If you don’t like the fees, don’t sign up with the platforms. Simple as that.
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I don’t disagree.
But I will say, as I understand it, that they really set this all up for delivery. So, they need to create, and maintain, the platform and the restaurants’ pages to get the delivery business. But the pickup option - IMHO - should be offered gratis.
Respectfully, what’s the evidence they’re growing the pie? Does the convenience of Ubereats really shift consumption that would otherwise go to grocery or cooking? Enough to offset the cost for these restaurants.
The stuff Grubhub pulled was pretty egregious (fake restaurant sites, exorbitant fees), and most independently owned restauranteurs claim the commissions hurt their bottom line. I’m inclined to believe them.
Maybe it’s too simplistic, but my heuristic for the app, vc based economy is that it benefits capital and consumers but not producers or workers.
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I’m not defending the shady business practices of GH and the like. But fact is, no restaurant is being forced to pay their fees if they don’t like it. Each restaurant needs to figure out if the ROI is there. Would I take 85 cents to a dollar for revenue I wouldn’t otherwise have. You bet. If they don’t see these platforms as a way to generate additional business, I recommend they don’t work with them. Whining about their fees just makes them look dumb.
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Pickup from Ronan through ChowNow (the only service with a link on the restaurant’s web site, so far as I can find) is free.
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Of course. But the question is, beyond shady practices, do these apps cannibalize more revenue through commissions than they create through growing the pie? If you’re inclined to believe the anecdotes in various articles about Ubereats, GH etc, they’re a net negative for independent restaurants.
And like many aspects of the modern economy, it may not be possible for independent restaurants to opt out and just not work with them. Effective regulation that values small business is needed.
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It doesn’t matter how much additional revenue a delivery service brings in if the restaurant is losing money on every order.
It might be reasonable to make it illegal for delivery services to charge restaurants service fees. Let the consumers placing the orders pay the full cost of delivery.
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It doesn’t take an MBA to realize that if you’re losing money on every order, that you need to stop taking the orders. Hopefully no restaurant is losing money on orders or they really should not be running a business. I’ve noticed that many restaurants mark up prices on these delivery services to make up the service fees.
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The contracts with the delivery services specifically prohibit this and have draconian clauses to allow the delivery services to sue the restaurants and collect attorneys’ fees in the process, so I doubt this is widespread.
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Totally agree.
The ‘market’ doesn’t just exist, and it’s not a siloed problem where individual businesses simply can opt in or out. Government should regulate effectively.
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Whatever the T&Cs are, it is a very widespread practice. I see it on at least 30-50% of restaurants doing this.
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Maybe an important distinction: is it the restaurant doing it, or is it the 3rd service doing it? I always assumed it was the 3rd party and that they did so to pad their profit. Customers may balk at a “delivery” or “convenience” fee, but very few probably compare 3rd party price vs. direct order price.
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It doesn’t matter who is doing it tbh - the restaurant knows what they’re netting on each sale. Losing money on each sale? Raise the price or stop making the sale.
That’s easy to say when its not being done to you and the company doing it gives you as many incentives as possible to ignore the reality.
I respect chefs and hope in my own small way my actions champion them so if they’re asking me to question the practices of these services I’m inclined to listen rather than blame them because I’m not directly affected.
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Could we agree that the delivery services (GH, DD, UE) are here due to consumer demand?
If so, can we really blame the effects of these services only on the delivery services themselves?
The delivery services are responding to market demand.
The best way to help restaurants is to educate consumers, not to demonize the delivery services.
(Ok, delivery services should be held accountable for shady/shitty practices like listing restaurants on their platforms without permission, creating fake restaurant websites, etc.)
But, ultimately, the consumer will decide the fate of the restaurants and third party delivery providers.
Best practices:
- Order from restaurants via their preferred channel, when possible. For many restaurants this is via call-in or their online ordering site (e.g. Chownow). The best way to find the restaurant’s preferred ordering channel is on the restaurant’s website or by calling and asking.
- Use third party delivery platforms to explore new restaurants and take advantage of promotions.
- If the decision is between ordering delivery via DD/GH/UE or not ordering at all, of course the restaurant would want you to order from the third party delivery service. 75-80% of a sale is better than no sales at all.
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Hear what you’re saying, and do truly appreciate the solution oriented best practices, but I’d argue there’s more to it than supply and demand.
None of the delivery apps make money. VC capital allows constant losses in the hopes that these companies, Grubhub, Uber etc, can monopolize a market and eventually jack up prices. Of course none of us can individually change this and it’s largely technological, but I’d argue these companies are middlemen charging ‘rent’ because of their market power vs independent restaurants.
More generally, this thread has in some ways become a proxy political debate, not that there’s anything wrong with that inherently. However, I imagine a lot of people come here, self included, to avoid the constant war of politics. It seems somewhat unavoidable on this topic, but for that I do apologize.
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I appreciate your perspective @starchtrade and that you seem to have a foot in both worlds (tech and food) to some extent.
My issue is that consumer demand is there because of the DD/GH/UE shady business practices. Those are what really helped them grab hold and insert themselves into the market.
Who wouldn’t want a convenient platform for restaurant searching and ordering? Oh wait, we forgot to tell you this is mainly possible because we exploit the restaurants on our platform? Have a coupon.
Tech companies have never played by the rules and that has resulted in a lot of interesting societal progression but also given power to people who think they shouldn’t have to play by any rules.
Had they grown with the idea of being a partner to restaurants and establishing a relationship with them (much like Tock, Toast and chownow) i could see maybe they’re perception from those in the food world being different.
But DD/GH/UE are interested only in power and their own growth.
At every step these services have found ways to screw restaurants while coddling consumers and issued canned solipsistic responses as to why when they get caught.
I personally don’t think that’s okay and do my best to avoid supporting them. Of course if my coworker gets Howlin Rays I’ll jump on from time to time but I try my best to vote with my dollar.
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