During the pandemic, apps like Doordash or Postmates are becoming more popular than ever before, chiefly because of how convenient they are. With a single tap, you can get food from your favorite restaurants delivered right to your doorstep, without having to go outside and risk getting infected. However, while these apps make life a little easier for the customer, they make it a lot harder for the restaurant.
Firstly, the relationship between restaurants and the companies that run these apps is very one-sided. The delivery apps treat their affiliated restaurants less like business partners and more like their own personal workforce, cutting into the restaurant’s profits when necessary. In a New York Times interview with Matt Majesky (the co-owner of Pierogi Mountain, a small restaurant), Majesky claimed Grubhub (the service they used for deliveries) took 40% of the revenue from the average order, and, when interviewed later on, Beverly Kim (a chef at the larger, more popular Parachute restaurant in Chicago) made a similar claim, saying that Caviar (a delivery app owned by Grubhub) took 25% out of the total amount of money they made off of each order. The percentages that apps take vary, but in every case, whether the restaurant is large or small, food delivery apps take a ridiculous amount of the profits for simply transporting the food from one place to another.
The companies that run these apps are also unsympathetic business partners in the way they deal with restaurants. They don’t seem to have the restaurants’ best interests at heart, and even charge additional fees for restaurants to be recommended to users of their app (in fact, this was the justification Grubhub gave for charging Majesky so much for every order). With Seamless (a Grubhub-owned delivery app), there are four brackets, 12.5%, 15%, 17.5%, and 20%, and the higher commission level a restaurant chooses, the more they are featured on the homepage of the app, according to an article by the Tribeca Citizen. They recommend and promote restaurants that pay a premium, and don’t place as much of an emphasis on proximity to the customer or the popularity of the food. Additionally, there are numerous negative experiences that restaurant owners have had with the companies that run these apps, like in a recent scandal where Grubhub offered customers discounts, but then made the restaurants cover the discount and pay a commission based on the undiscounted order total.
The business practices of the delivery app companies are questionable at best and exploitative at worst. Unfortunately, Grubhub charging restaurants for the discount they chose to offer is only the tip of the iceberg. The Counter, a newsroom dedicated to investigating the companies behind American foods and food-related services, found that some delivery apps (like the previously discussed Grubhub) have been buying up thousands of website domain names that match the name of a restaurant they are affiliated with, and then taking orders for the restaurant through the website. This is done without permission from the owners of the restaurants and the websites are sometimes in direct competition with the official website. In this way, food delivery companies are actively trying to limit the online presence of their restaurants, making them more dependent on the apps. The article also discussed another dubious policy of the companies: setting up phone numbers that purportedly belong to the restaurant in question, but that actually link to the delivery app. With each call, companies ensure that they’ll get paid a commission, even if the call doesn’t result in an order.
And there are still other important (albeit unintentional) ways in which food delivery companies take away from the profits of restaurants. Oftentimes, restaurants lose business based on mistakes made by the delivery app companies. If the food is delivered late, or if the prices are inflated by the companies so they can make extra money off of the delivery, customers will often blame the restaurant itself and won’t return with their business. For example, in an interview with Berkeleyside, an online news publication, Sean Hagler (who runs a Texas-style barbecue) said that customers would call in to complain about his restaurant because the delivery apps he was associated with overestimated his supply of brisket.
The worst part is, it’s not true to say that these services need to charge extra to pay their workers- all this exploitation can be attributed to simple greed. It’s a well-known fact that drivers for food delivery apps aren’t paid immense amounts of money. The DoorDash website itself states that a driver for the company can expect to make about $2 to $10 per delivery depending on the distance they have to drive, a rate which is about the same for most other delivery apps This means that, as with many jobs in the restaurant industry, tips make up a large portion of the money drivers make (which is also affirmed on the DoorDash website). However, in 2019, it was revealed that DoorDash was taking a percentage of the profit from tips that were paid to drivers through the app: in essence, they were stealing from their own workers. DoorDash of course was caught when they did this, but they are likely not the only ones with a policy like this, and the aforementioned additional money they take from struggling restaurant owners still does not go towards supporting their workers or increasing their pay.
One could bring up the point that restaurant owners are choosing to use these delivery apps, but at this point, many are forced to. Initially, these types of apps were indeed chosen by many restaurants because they were generally cheaper and easier than hiring people to deliver food, but as the corporations grew, they became more powerful and less reliant on the wellbeing of individual restaurants, meaning that they were able to adopt the exploitative practices described before. Now they are practically a mandate because of the millions of Americans who use them almost exclusively to find places to eat. This is especially true for smaller restaurants (who are more impacted by the policies of the companies), since they don’t have much exposure and because the existence of delivery apps has made the ability to deliver food a requirement for success. And now, during a global pandemic, deliveries are the sole source of income for many restaurants (or close to it), with food delivery apps getting more than twice as much in the past year according to MarketWatch, meaning that the significant fees that food delivery services charge are even more notable and detrimental to the profitability of restaurants across the nation.
Many people who buy food from restaurants during this time feel that they are supporting local businesses, but when we use apps like DoorDash, Grubhub, or Uber Eats, we’re supporting avaricious corporations and hurting the people who make our meals. What actually helps struggling restaurateurs is dining in person (if it is safe to do so), ordering takeout that you personally pick up, or calling a restaurant directly if they offer delivery independent of apps. It may be a little more of an inconvenience for you, but it will go a long way to ensure the wellbeing of the people in your community.