Since the forced shutdown of front of house dining-rooms everywhere across the United States only months ago due to COVID-19, restaurants have had no choice but to begin to pivot and flex in order to simply stay in business. As the weeks have passed by with no true end in sight, we’ve witnessed an expansion in delivery services nationwide: restaurants that were unaccustomed to delivery quickly learned how to be, third-party delivery services offered aid only to become overwhelmed, and larger chains with food delivery services already in play learned how to become more efficient. At any rate, COVID-19 has rapidly changed the way that restaurants view delivery services (and the parties that provide them). An undeniable line has been drawn in the sand, and food delivery apps are in the hot seat. Food delivery as we know it, may never be the same and it’s becoming increasingly apparent that restaurants are not the only food-based businesses that need to pivot to stay afloat.
Third Party Apps: Why So Expensive?
After dining rooms were under a government-mandated closure and delivery and pick-up became the only remaining opportunities for revenue, an emerging issue with third-party delivery providers began to surface for both restaurants and consumers alike: they’re just too expensive. The nearly conversation-less way of ordering through a third-party app was the hot new thing pre-COVID, and now that the post-COVID delivery boom is alive and well, third-party app fees have begun to not only be questioned but retaliated against and in some cases, capped.
While the plug-and-play model of a third-party app brings a level of simplicity for restaurants wanting or needing to expand to delivery, the execution of the delivery of itself is inefficient. Instead of having restaurant employees paid by the restaurant to deliver to a specific region surrounding the restaurant, third-party apps do not limit the distance for delivery. It’s a rag-tag form of a model that had been already perfected in the restaurant industry for years. Third-party app drivers pick up from anywhere (often making multiple stops at a time) then deliver to anywhere without a strategic plan in place. It is essentially a glorified food concierge service, and because of the lack of structure, the inefficiency costs time and money. And costs are re-routed to the restaurant and the consumer to be covered.
As a result of the toll that the app’s inefficient model has placed independent restaurants, governments from Seattle to San Francisco, have begun to limit the amount of commission that a third-party app can take from their restaurant clients and consumers to 15% from the previous 30-40% they were previously charging. And while the percentages that apps like UberEats, GrubHub and Postmates take from their client have always been unfair, due to their popularity, restaurants have been forced to play along (albeit unwillingly) for sometime now. Some two years ago, articles were published on how third-party apps are “killing local restaurants“. But now that consumers sit at home, out of work and dependent on these services, the issue has become crystal clear and consumer have begun to rally together against the stifling commission fees. But the fees are only the tip of the iceberg.
There are also several other downsides that accompany third-party apps. Quite often, deliveries are incorrect and/or cold by the time that it reaches the customer. Unfortunately, due to the way the inefficient operational structure, the fault tends to fall on the restaurant for the botched delivery and a faulty narrative begins to form. As a result of the overwhelming costs of third-party apps as well as an attempt to reclaim the narrative, restaurants have begun to increase their own delivery fleet to meet demand and work more closely with their customers to begin the process of leaving out the middle-man.
Consumers in New York have filed a class-action lawsuit against third-party apps citing the unfair fees and that apps have placed unprecedented expectations upon the independent local restaurants to charge the same for delivery as they do for dine-in. Consumer publications, like Food & Wine magazine, have also begun to urge consumers delete their food delivery apps and contact restaurants directly in order to support local businesses who have been subjected to revenue loss due to the commission costs.
The forced changes brought on by COVID-19 have undoubtedly placed the spotlight on delivery apps. While restaurants pivot toward delivery as a permanent revenue stream post-COVID, third-party apps have no choice but to go back to the drawing board concerning their operational processes. The haphazard route has been undeniably exposed and restaurants and consumers alike are calling for change. As the restaurant industry continues to rally together in advocacy for one-another during this time, third-party delivery apps will have no choice but to fall in line or to continue to fall out of grace with their customers.
Has your business been affected by COVID-19? We are here to help. MenuCalc is offering an extension on our free plan in advocacy for food-businesses during the pandemic. Contact Us Today.