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Home / Tips and Tricks / Food delivery apps say they save restaurants. Instead, they charge large fees

Food delivery apps say they save restaurants. Instead, they charge large fees



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Getty / Oscar Wong

A few weeks ago, Giuseppe Badalamenti, restaurant consultant and owner of Chicago Pizza Boss, posted a Grubhub receipt from an anonymous restaurant he works with on Facebook. The restaurant earned about $ 1

,043 from 46 orders through Grubhub – but after various fees and promotions, it took only $ 377.

The post went viral, with more than 6,000 shares on Facebook as of Thursday. "I had seen some GrubHub receipts from other customers, but this one was just outrageous," Badalamenti told CNET.

Coronavirus locks and quarantine has led to spikes in food delivery services including use of third party apps such as Grubhub, DoorDash, Uber Eats and Postmates as more people stay in trying to support local restaurants that have closed their doors in addition to pickup and delivery. However, many customers do not realize that these apps charge large fees for restaurants – usually between 15% and 30% of the total order price, according to several restaurant owners interviewed for this story.

Read more: Best food delivery service: DoorDash, Grubhub, Uber Eats and more compared

Restaurants choose to work with third-party delivery apps to access their millions of users – if a customer doesn't see a local restaurant On any of the apps, they may assume it is not open or not delivering and go with another option that is there. The apps can also free up staff and reduce order errors and prevent customers from jumping out on a check, Badalamenti said. But especially in the middle of the pandemic, delivery service fees are reduced to already reduced profits – even though apps have reduced fees in recent months.

"People use these apps on the assumption that everyone gets a fair shake," Badalamenti said. "And a lot of people are exploited because they think they have to play this game."

The Truth About Delivery Fees

The best delivery apps like Grubhub, DoorDash, Uber Eats and Postcameras charge restaurant commissions in different ways, often depending on the individual restaurant and what services they decide to use. For example, in the receipt posted by Badalamenti, $ 362 of the restaurant fee was from in-app marketing and one offering $ 7 off orders – which both restaurant chose to do.

"Restaurant owners choose the services they want and only pay a commission to Grubhub when we help generate sales," according to a statement from Grubhub. "Grubhub is happy to work with restaurant partners to help them manage costs and grow their business."

Read more: How to safely order food delivery, collection and groceries under the quarantine quarantine

Fees charged by these companies cover costs for delivery people, operations and other customer service, among other things.

In the midst of the coronavirus pandemic, some of the delivery apps have made efforts to help local restaurants. But some have become more famous than others.

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The six restaurants owned by Erin Wade are currently empty.


Jen Judge

In March, DoorDash reduced its commissions from local restaurants by 50% for both DoorDash and Caviar delivery apps. From mid-March to April, independent restaurants were able to register on both platforms for free and pay zero commission for 30 days, without being asked to pay anything back. Existing DoorDash and Caviar partners were offered no commission on pickup orders. In April, the company announced that it would reduce commissions from all local restaurants by 50% through May.

For Uber Eats, commission is based on factors such as restaurant volume. The company waived commission on all pickup orders and lowered fees on orders where restaurants use their own delivery people to 15%.

GrubHub temporarily suspended up to $ 100 million in commission for independent restaurants in March. However, these fees are only those related to marketing (what restaurants pay to be displayed on the platform) – other fees such as delivery and ordering are still being processed.

"Even before the coronavirus started, these delivery apps already damaged restaurants because the charges were so high," says Erin Wade, owner of six restaurants in New Mexico and Austin, Texas. "Customers love their restaurants in the community and think they support them when they place an order [through a third-party delivery app]," Wade said. The fees "are a real shock to people."

The apps provide a delivery service for restaurants that might not otherwise have one, says Antonio Ferraro, owner of Napoli Pasta Bar in Washington, DC. "On a rainy night or during weekdays that I don't offer delivery, it can help a little," Ferraro said. "Your name is out there, and people know you're open."

Despite the commission costs, third-party apps are sometimes worth using to keep the doors open, says Octavio Diaz, owner of Agave Uptown in Oakland. "At the end of the day, you may not be making money, but you have your staff working," Diaz said.

Cities have also stepped in to try to meet delivery service commissions during the COVID-19 crisis. During the past month, San Francisco, Seattle, Washington, DC and New York City passed emergency orders requiring delivery apps to rate restaurant fees at 15-20%. Similar legislation has been discussed in Los Angeles and Chicago.

Restaurants are seeking other technical solutions to stay alive

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Octavio Diaz, owner of Agave Uptown in Oakland, uses an order called Internal Slip to take orders internally instead of via delivery apps.


Octavio Diaz

Unless third-party delivery service fees drop to something between 5% and 10%, it will be difficult to use them, several restaurant owners said.

In the meantime, many other technological alternatives seek to reach customers and keep doors open during the pandemic and beyond.

Diaz & # 39; s Agave Uptown is a 149-seat restaurant in a business district in Oakland, where almost every seat is full during lunchtime on weekdays. Before the pandemic, the restaurant used GrubHub and Caviar for delivery. The fees were "between 28% and 30%," Diaz said. "We're basically giving our profits away."

The restaurant has since started using Ordrslip, a service that designs an app to work with the restaurant's sales system for a fixed monthly fee. Now Diaz puts leaflets in every bag that is picked up by third-party delivery companies and lets customers know that the restaurant has its own app and ordering options.

Mark Mizer, owner of Seattle-based Thai restaurant Buddha Bruddah, recently started using the BentoBox service, which helps create a website and take online orders directly from customers.

The restaurant saw more than $ 50,000 online orders in April. "The community wants to help local businesses survive and will order directly from you for delivery if they have the opportunity," Mizer said.

How to support your local restaurants

Every restaurant owner interviewed for this story agreed: The best way to support your local restaurants is to place an order or place one directly through the restaurant's website or app, when is possible. Local restaurants are likely to offer pickup and may have an in-house delivery service. They may also have a wider selection and discounts that are not available in the delivery app, said Rena Dongparteep, co-owner and chef at the Asian fusion restaurant Shiitake Bistro in Delray Beach, Florida.

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Napoli Pasta Bar encourages customers to pick up directly at restaurant.


Naples Pasta Bar

If you order directly, you can also save some money, because extra fees and charges are usually added to the tab when ordering through the public delivery apps.

When ordering, leave a review and tag the restaurant on social media to help spread the word, Dongparteep added.

Of course, there are warnings for people who are sick or quarantined and cannot leave the house. But even then you can look for local delivery services to keep money in the local economy, Wade said.

"When this is over, what restaurants need most is people coming back and eating at restaurants," Wade said. "That's what we're prepared to do. We're not set to be a McDonald's that serves packaged food in volume around the world."

Maintaining the direct relationship with restaurants again is important, she added. "That's how the business has worked for a really long time," Wade said. "And now there are all these middlemen between us and our guests. And that has made business much more difficult."





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