Throughout the pandemic, we have been forced to stay home and save for essential outings.
While schools, restaurant dining, churches, and workplaces have been shut down, food delivery apps such as DoorDash, Uber Eats, and Grubhub have been able to thrive. The industry’s earnings have soared. DoorDash reported a 198% jump in revenue last quarter to $1.1 billion. This comes even as restaurant dining is reopening around the country. As handy as these apps are, however, they aren’t cheap for the consumer. Nor are they cheap for restaurants, which are often slammed with 30% commission fees per order. That eats a huge chunk out of much-needed revenue.
I talked to chefs Andrew and Lauren Gruel about the situation.
The chefs own Slapfish, a franchise boasting sustainable but affordable seafood based in Huntington Beach, California. But you might know the couple better as the outspoken critics of arbitrary, mandatory lockdowns. The Gruels wish people would understand just how much food delivery apps hurt restaurants.
“Look at the relationship between the restaurant industry and Silicon Valley and the way third-party apps have completely taken advantage of restaurants, especially through the pandemics. They’re being propped up as heroes by the Left, right?” Andrew told me. He added, “They’re not altruistic. They’re taking 0.30 [cents] on every dollar. They’ve spent millions on a marketing campaign saying there is no commission to the consumer.”
So, why do restaurants utilize these apps if they’re so hard on their bottom line? Well, because restaurants, especially in metropolitan areas such as New York City or Los Angeles, hit hard by the pandemic and lockdown restrictions, need the cash flow these apps facilitate. Andrew says that “they’re just kicking the can down the road.” He explained that apps might help bring in $10,000 at first. While they’d lose $3,000 to the app fee structure, they would net $7,000, just enough to keep the restaurant going in the short-term, but not enough to keep the restaurant out of the red long-term. Gruel says restaurants have to do it for the cash flow and competition’s sake. “You feel the need to do it. You see all these competitors on these platforms, and it’s, like, here’s the money now, I’ll worry about debt later.”
DoorDash attempted to aid restaurants by changing their fee structure at the end of April. Just after I spoke to the Gruels, the company announced it would give restaurants more control over their fees. The New York Post reported, “The new commissions will allow restaurants to choose to pay as little as 6% of an order, rising to 15%, 25%, and 30%, depending on their needs. Previously, restaurants were forced to negotiate their fees, which led to many smaller restaurants forking over 30% of every food order to a tech giant simply because customers chose to order their food via a website or app instead of calling the restaurant directly.”
But that might be too little, too late. Restaurants are reopening as lockdowns lift and the other apps continue to charge hefty fees.
Going forward, Lauren Gruel encourages patrons, whether in a pandemic or not, to order directly from the restaurant, if possible. That will help restaurants make more profits.
To be clear, Andrew doesn’t want the government to save restaurants or “manipulate the market.” Rather, he suggests local governments create a subsidy for third-party delivery companies that essentially mitigate that 30% fee. “It would have been more financially viable … [to] allow for some sort of write-off … to encourage people to stay home and restaurants to use those platforms, the platforms could have truly been the heroes. That would have been an approachable, reasonable plan. Nobody was looking at this to come up with viable solutions. Everybody wanted their cut of the pie and screw everybody else.”
Nicole Russell (@russell_nm) is a contributor to the Washington Examiner’s Beltway Confidential blog. She is a journalist who previously worked in Republican politics in Minnesota.
