Pizza Business Owner Shares Harsh Reality Behind Food Delivery Apps

[demmiblue]

During the COVID-19 pandemic, many stores without an internal delivery service have turned to apps including Grubhub, DoorDash, Postmates or UberEats, providing them access to an online store and a vast network of drivers, but at what cost?

Giuseppe Badalamenti, a consultant and owner of small business Chicago Pizza Boss, published a picture he claimed was of a Grubhub invoice earlier this week that appeared to show just that, indicating one restaurant made under $400 from orders totaling $1,000, underscoring the high fees charged by delivery apps and revealing the harsh reality for restaurants.

The image featured an order summary for March, indicating the app took hundreds of dollars in commission, fees and promotional costs from the unnamed outlet.

He wrote: "Stop believing you are supporting your community by ordering from a 3rd party delivery company Out of almost $1,100 of orders. Your restaurant you are trying to support receives not even $400. It is almost enough to pay for the food."



https://www.newsweek.com/coronavirus-food-delivery-apps-harsh-reality-commission-fees-grubhub-1501375?utm_term=Autofeed&utm_medium=Social&utm_source=Twitter#

[ProfessorGAC]

1. Wow!

I've never even explored these aps because it's a small town. The restaurants that might have drivers available are 16 to 20 miles away, & I suspect the delivery fees are prohibitive.
But, that invoice seems ridiculous.

[marybourg]

2. What's the alternative?

Maybe the restaurants in a given area could set up a shared delivery 🚚 service of their own.

[lark]

8. Drive to the restaurant and pick up the food.

We drive to our local hole in the wall Mexican restaurant at least once a week and to our fave mom and pop Sushi restaurant the same. We don't use GrubHub because they charge these small co. too much and we want to help them, not GrubHub. The only reason I can see not to do this is if you live in the city and don't have a car and public transportation isn't the safest right now.

[marybourg]

10. Well, I meant an alternative for the restaurant owner.

Presumably delivery brings in customers he wouldn’t otherwise have. If not - if everyone was willing to do as you do - there’s no reason to share his profit with the delivery company. And I can posit many, many more reasons why people cannot or won’t drive to a restaurant in the evening.

[lark]

11. Agree that there are many reasons some folks can't get take out, but get creative.

Drive for breakfast or lunch food and eat in at night is one option.

Yes, there are other reasons people can't do this - like being sick or having bad eyesight. I think a lot of people don't realize the harmful effects these delivery options have on the restaurant owners and use these apps without thinking. When I had multiple concussions last year and couldn't drive or do much of anything, family members and friends brought me food. I know everyone isn't this lucky, but would just hope more people would be mindful of their actions and only use these delivery options only as a last resort.

[tulipsandroses]

12. I disagree with this. I don't think the point of these services was ever meant

to be a main or sole source of income. I remember watching a program about this when Ubereats first started catching on a couple of years ago. The restaurants interviewed at that time said they considered this service additional income they would normally not receive. They could still have their regular dine in customers, even be at capacity and get additional diners that would not have walked through the door anyway or that they would not have been able to accommodate.

So now this service is the only or main income for restaurants. Not the same as when they are operating full force and have regular patrons. Its also a marketing tool for businesses to get new customers they would not normally reach. I have empathy for local small businesses and what they are going through right now - but I think its a bit unfair to make these services the villain of what is happening.

These services also provide extra income for many people so there's that when you are saying people should avoid using the service. This is a convenience service for the restaurant as much as it is for the customer. It sucks that this pandemic is causing so much hurt for restaurants but I don't think delivery apps are a villain in this case.

[msongs]

15. so grub hub rakes it in on fees while the restaurant loses. definition of a parasite nt

[tulipsandroses]

18. Lets break down that invoice -

I am more familiar with Door Dash so I will reference them here. I would imagine that Grubhub has a similar business model.

With the adjustments and promotional fees - that is $362 more this business could have kept for themselves.

Promotion is good marketing for businesses that can afford to do it. The promotion is to entice customers to place an order. I've seen all kinds of promotions offered -Free delivery, free meal, free item, $10 off your next order if you refer a friend, $20 to your first order for first time customers, etc, etc. Did this restaurant have the option to stick to just the basic delivery service? Was it mandatory for them to do promotions?
Here is Door Dash's policy on promotion and marketing
][link:https://help.doordash.com/merchants/s/article/First-Order-0-Delivery-Fee-Promotion?language=en_US|


7 order adjustments on that invoice. That is something that the restaurant needs to address within their organization. Those are their mistakes. Order adjustments happen when the customer's order is wrong. Who should eat that cost? The customer? Grubhub? Here's an example that happened to me - I treated the male techs on my unit to lunch for Father's Day. $75 order. So many things got screwed up with the order. For the most part, all the guys went on and just ate what they got. One person could not, he does not eat pork. His burger came with bacon. Its not as simple as telling him just take the bacon off. So he ended up with a meal he could not eat. Should I have been the one to lose money here? His order was about $15 Damn skippy I called Door Dash to complain and was credited. I have had other issues that I have been credited for. For the most part, my orders have been problem free though.

Here is Door Dash's policy on order adjustment - I suppose that Grub Hub may be something similar.
[link:https://help.doordash.com/merchants/s/article/What-are-order-error-adjustments?language=en_US|

The one thing I take issue with on that invoice is the delivery commission. I think it should be one commission only.

[Tipperary]

20. Same here.

Just did so at my local Chinese.

[Blue_true]

23. Order directly from the restaurant and use it's delivery drivers, or you drive in and pick up.

Many of the places will bring the meal to your car.

[marybourg]

28. well, if the restaurant has their own delivery drivers

they would be telling their customers and not contracting with these expensive delivery services.

[Happy Hoosier]

3. Find a way to do it better!

I still use local delivery services when they are available. But ultimately, if a restaurant can’t make money using those services, then find a better way, or don’t use them. Seems pretty straight forward.

[brooklynite]

4. I don't use them; I call the restaurant directly and pick it up myself

[Tipperary]

21. Same here.

I do not want another set of hands on my food.

[House of Roberts]

5. I'm not paying someone to deliver to me a $4 Burger King meal.

We pick up our own pizza too.

My ex delivers auto parts from O'Reilly's to automotive shops, and they don't charge anything for the delivery. She rarely gets a tip, because the parts are put on account, so no money changes hands. She'd probably make more money working for Dominos, but she'd have to wear out her own car. O'Reilly's supplies the vehicle, upkeep, and insurance, at least.

[DrToast]

6. Mixed feelings

I sympathize with the restaurants, but it’s also convenient to be able to order food through an app from many different restaurants. It’s much more convenient than calling in, giving your order, address and cc info. So they are providing a service.

But if you want to support your local restaurants, the lesson is to call them directly.

[tulipsandroses]

7. One thing that troubles me here is -why is there a separate commission for delivery?

Grubhub should be paying for the delivery - Is the separate commission fee for the driver? I think there should only be one commission fee - Grub hub should pay the driver from that fee.

As far as the promotions - Is the restaurant allowed to opt out of the promotions? Promotions are a nice thing for the customers. But if the promotion is not affordable for the restaurant, do they have to do it?

I have never used Grubhub. I use Door Dash, I suppose they operate similarly. I appreciate the promotions offered. - whether its free delivery or a throw in of an item for free. I think its great if you can afford it - I've sometimes ordered from a restaurant I have never ordered from before because of the promotion. Hence, if I like the restaurant I will order from them again even without a promotion ,so I think that is a useful marketing tool for the restaurants that can afford to do that.

The order adjustment is a must. The restaurant has to eat the cost if they mess up the order. That's no different than when you eat at the restaurant and your order is messed up. The customer should not eat the cost for the restaurant's mistake.

The issue I see are all the separate commission fees.

[Buns_of_Fire]

9. Tips to the driver charged at the time of order?

That might be the "delivery commission", as opposed to the "commission" (which, I guess, would be Grubhub's percentage of the order). Just guessing.

[tulipsandroses]

13. That makes sense.

The tip would be in addition.

[Coventina]

14. The drivers for those apps can be real jerks.

Whenever there's a line (and there's often a line for pick-up these days), they cut everyone else and barge their way to the front.

When called out they say things like "if you're Door Dash, you don't have to wait in line!"

The other day, one of those jerks got told by the restaurant people he had to wait in line like all the other customers!!!

[LisaL]

16. As far as I can tell, restaurants sign up for these delivery services.

Nobody makes them to. If math doesn't work, then don't do it.

[Buckeye_Democrat]

22. Exactly. nt

[Blue_true]

25. The restaurants are desperate.

With a lot of online services, there are hidden charges that a person has to read the fine print of. I have a friend that owns an eating place, you have no concept of how busy the life of such a person is, it is long hours, constant moving and maybe at the end of a day after expenses, the owner has made as much personal income as an employee on most days. The margins are low in the best of times, that is why I advise people to never ask for discounts from a restaurant, regardless of how big the order is, a discount could be the gross profit the restaurant needs to pay employees and bills.

[drmeow]

26. actually, there have been cases

of these services listing restaurants without their permission

[Jose Garcia]

30. In those cases, why isn't the restaurant charging full price?

[smirkymonkey]

17. There are still a few restaurants in Boston who do their own delivery, but they are few and far

between. I try to use direct delivery whenever I can.

[Tipperary]

19. I just came back from picking up my food.

I will not pay a third party. Plus that is one less set of hands to touch my order.

[standingtall]

24. I've heard these stories before and Im not sure I believe most of them

First off restaurants do not have accept orders from 3rd apps. Most of them wouldn't be doing it if they were not making something off it. Most restaurants do not have their one delivery service, because their own delivery service so it is probably cheaper for them to use 3rd party apps and they are reaching a customer base they normally would not get without their own delivery. Yes 3rd party apps are taking commission fees from restaurants, but consulting firms who introduce no viable alternatives while telling restaurants the how bad 3rd party apps are also taking fees.

Seriously if restaurants really thinks it's that bad then they should refuse orders from them and if they want to continue delivery after that than they should pay the expenses for it with the exception of the handful of restaurants that have their own delivery, but still do 3rd party app orders they should just refuse them.

[Major Nikon]

27. I had a restaurant owner actually tell me not to use Grubhub

This was early last year. I was using the app to make my order and picking it up at the restaurant. The owner told me to stop using them and call the restaurant directly because they charged him high fees. The problem was the reason I started using them in the first place is because they kept screwing up my order (English isn’t their first language). Kind of irked me so I just stopped using them completely.

I wouldn’t be surprised if restaurant owners are the losers in all this. I don’t know that they have much in the way of alternatives.

Personally I think the answer is unionization of drivers into coops that provide them with decent pay and benefits while not skimming off the top. All types of restaurants could use the coop to get as many delivery people as they need on an as needed basis without some 3rd party corporation gouging them.

[UTUSN]

29. Goes for debit/credit? cards and the business printing costs for receipts?

The last haircut I got, was $6 more with a card than in cash.