3 Ways Delivery Apps Are Ruining Your Favourite Restaurants

A woman delivering pizza to a doorSince the beginning of the pandemic, many restaurants have been forced to shut their dining rooms and pivot to a delivery model. This includes restaurants that didn’t traditionally offer delivery, like fine dining and fast-casual restaurants. Without diners coming in every day, they had to find a way to cover rent, payroll and all the other expenses that go along with running a restaurant.

And for the most part, consumers have been there wanting to support and help their local restaurants. Many have turned to ordering delivery from their favourite restaurants—both because they love the food and because they just want to help.

Unfortunately, consumers ordering through a delivery app for convenience may be doing more harm than good. 

The delivery apps that are claiming to be lifesavers for the restaurant industry have been taking advantage of the pandemic for their own gain. They’re harming restaurants and making it even more difficult to remain profitable.


1. Delivery Apps Charge High Fees to the Restaurants

A standard commission from a third-party delivery app is anywhere between 30%-40%, charged directly to the restaurant. That means that if you were to order a $20.00 dish, the restaurant only receives between $12 and $14. In many cases, this commission is on top of the delivery charges that they charge you, the consumer, when you place the order.

These fees are hard to swallow at the best of times, but right now, when restaurants are backed into a corner, they’re nearly impossible. Restaurants operate on tiny margins and set their prices as low as possible while maintaining profitability. When commissions cut in and take nearly a third of their revenue from delivery and takeout orders, they’re no longer covering costs.

 

2. They Require Restaurants to Pay for Promotions

Sometimes, delivery apps will step in to offer promotions for their customers, like waiving delivery fees, or offering a discount if you spend more than a certain amount. These may appear great to the consumer, but the delivery apps aren’t paying for these promotions themselves. They require the restaurants to cover those costs too.

Restaurants who’ve signed up for the delivery apps don’t get to pick and choose whether they want to offer a promotion—the app decides when to offer it and passes the cost along to the restaurant each time a promotion is applied to an order.

 

3. They Don't Let Restaurants Adjust Their Prices

You would think that the easiest way to compensate for the increased costs would be to simply raise prices. But the thing is, these apps don’t let restaurants charge a higher price in the apps than elsewhere. Meaning, they can’t charge less for orders placed directly through the restaurant. The restaurants are obligated to charge customers the same price no matter how they place that order.

Restaurants can’t compete with delivery apps on a price basis, and that’s why they need your help.

They need you to order directly through the restaurant. If they don’t offer delivery, make the extra effort to pick up takeout.

Right now, restaurants have few options. They have to work with delivery apps if they want to stay open. Delivery apps have done a fantastic job of positioning themselves as the saviours of small businesses since the start of the pandemic. But they’re not.

Instead, they’re taking advantage of a painful time to make huge profits—at the expense of your local restaurants.

You can help save your favourite cafes, diners and restaurants. You just need to order directly through them.

 

If you're a restaurant looking for a way for your customers to order directly through you, check out our apps for restaurants. 

 

Published on 29 April, 2020

Written by Amin Yazdani

Picture of Amin Yazdani
Amin Yazdani is the CEO and Co-Founder of Craver, a fast-growing mobile platform for Restaurants, helping them gain and retains their loyal customer base.