Even before the pandemic, restaurant owners were disgusted by the exorbitant fees charged by third-party delivery services and some cities were trying to limit their power, but after the COVID-19 quarantines started and restaurants’ business became dependent on takeout and delivery, it became even more apparent how badly they were getting screwed over.
Yesterday Gina Pollock at LAist took a deep dive into the world of delivery apps in LA restaurants. She talked to representatives of the big four delivery services that control 95% of the market—Grubhub, DoorDash/Caviar, Postmates, and UberEats—and talked to restaurant owners who have worked with them. “During this process, one thing became clear,” Pollock writes. “Some of these companies aren’t transparent with the public about the commissions and fees they charge restaurants — and they don’t have to be.”
The services paid lip service to the loss of business restaurants suffered during the pandemic and offered special discounts and deals. But the deals, it turned out, didn’t help the restaurants much at all. Some restaurants were operating on such narrow margins that once they paid the fees and commissions to the third-party apps, they would end up losing money on every order. Several owners Pollock talked to closed their restaurants altogether: the delivery apps charged so much that they wouldn’t have been able to continue to pay their rent and their workers and order supplies.
“It’s hard because a lot of small restaurant owners are immigrants,” one owner said. “Some are older and don’t have the tech savvy to partner with these apps successfully. I’m in several Facebook groups where they’re just like, ‘I can’t even navigate this dashboard to set up the menu and then take the pictures.’”
Other restaurants have been trying other ways of getting around using third-party apps, either by doing delivery on their own or relying on other services, like couriers or newer services like Tock and ChowNow that are more difficult to use, but also charge lower fees.
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Pollock’s article is very long, but it’s definitely worth reading. If you’re not convinced that third-party apps may not be the best way to get your food, you probably will be by the time you finish.