delivery apps profit as restaurants forced to close doors

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Third-party delivery platforms frame their business as one of marketing. When restaurants still had dining rooms to fill, apps promoted their service as a way of reaching new customers. Now the platforms hold the restaurant market captive, and the apps are more crowded than ever. On the consumer side, the deals look great: UberEats is dropping delivery fees to drive more demand. Grubhub is offering a special “Supper for Support” $10 discount to qualifying customer orders every evening.

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But restaurants are left to pick up the tab, as Grubhub’s usual commission is still calculated on the pre-discount total. From company to company, those commissions can range from 15% to as high as 35% of order

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Faced with shutting her doors for the first time in over 20 years, Rachel Herbert, the owner of four Park Cafes across San Francisco and Oakland, took her chances on tech. “The first place we turned to was the third-party delivery companies,” she said. “When we’re looking at what we need to do to keep our doors open, we have to remember that 30% of the revenue we’re taking in is going to go to third-party delivery. They’re experiencing a boom. Don’t get me wrong, we’re grateful for the service. But it sure would be nice if they reduced those fees.” Herbert says sales are down 80% across her cafes, which relied on neighborhood foot traffic. “We’re not really breaking even, but we’re keeping our doors open, so we’re making enough to pay the people who are working and providing that service for the neighborhoods,” she said. “It’s a matter of survival.” Los Angeles restaurant owner and consultant Adam Weisblatt often tells his clients that third-party delivery is a good tool for short-term cashflow – but not for profit.

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