If you care about your local restaurants and have the means to do so, consider calling in your order and picking it up yourself, with mask and gloves. Services like GrubHub take a huge portion (like 30%) of the ticket price just for delivery.
If we really want to support local restaurants (and give them better chances of post-COVID survival), we should do exactly as stated above: call in to order directly.
Do not give GrubHub, Uber Eats, and similar services a large portion of your order total just for being an easy-to-use middleman. The vast majority of restaurants around today are capable of processing payments and handling pickup/delivery themselves.
While these restaurants fight to stay alive in unprecedented times, the least we can do is put in a bit more effort for an order of food we would have placed and paid for anyway.
Thank for the advice, but I highly value an easy-to-use middleman. How many orders would these restaurants miss out on if they didn't offer the easier option? And it's not just the ease of use (viewing the menu, adding comments, seeing real-time delivery status) but it's that fact that these services offer a centralized way to find restaurants to order from in the first place. I'm not saying I love the current balance of power, but much like with old-style taxi services, the new way is an undeniably better experience for the end user. People will never abandon the easier way, and much like with more traditional boycotts, relying on consumer action is a losing strategy for enacting change.
At the end of the day, would I rather give 30% away to Uber, or would I rather pay directly the restaurant. I prefer encouraging small business, especially RIGHT NOW!
Personally I use postmates, and with all the fees they stick on it, I’ve assumed it didn’t cost the restaurant anything. Does anyone know if this is true?
It's entirely plausible that for many restaurants running an online ordering system/delivery network costs them 20-30% of the order price regardless.
They don't provide a 20% discount from the prices on their own websites/flyers because those are the normal prices.
Then I would be 95% sure to get at least two things in my order wrong, rather than just 50% sure to get one wrong.
(There are several reasons I don't order out, and that's a biggie.)
You'll also synchronously resolve any issues, like if they're out of a certain item.
Most every place seems to have optimized for internet orders, not phone.
Plus a lot of places are a little cheaper if you call.
Say I pay ~$20 dollars total for a delivery including tip. My usual Indian takeout order. A real human spends 30 minutes picking up and delivering my order and makes ~$7 (or a little less than $15/hr but not really since they're not getting a steady stream of deliveries). $4 of that order was my tip for the driver so the delivery service and the restaurant now have to divide up the remaining $9 which is already less than 70% of the menu price of what I ordered.
Unless people start getting okay with paying way more for delivery it's gonna continue being a "squeezing water from a stone" situation.
You can argue that is a free market and restaurants are free to not participate if the cost is too high. Some do, at least some of the popular local spots around me are NOT on any delivery app. But most restaurants also can’t afford to not have this sales channel, especially during COVID. So now they are left in the shitty position of choosing between losing a lot of their orders and losing money on a lot of orders and hope dine in comes back soon.
https://www.theverge.com/2020/1/29/21113876/grubhub-seamless...
That said, I completely agree with the rest of your comment. We just don't want to pay what things are worth.
[0] https://www.eater.com/2020/5/1/21243966/giuseppe-badalamenti...
Anyone claiming that GrubHub is only taking a 30% delivery fee and ignoring all of the other charges they tack on to reduce restaurants' income is simply lying.
edit: reading further, grubhub auto-opts in the restaurants into this promotion. That's scummy, but also exists due to US auto opt-in. I believe in Europe, this wouldnt fly as they need you to explicitly opt-in, not explicitly opt-out after they implicitly opt-in. Scummy, but the american way
edit2: i think the verge, incorrectly reported in late march that restaurants "must" opt-in. from the perks program T+C. "Your participation in the Perks10 Program (the “Program” formerly known as “Supper for Support”) is optional. By electing to opt in each restaurant location identified to the Program, "
so 42% for both "advertising/marketing" (grubhub is providing the order to the restaurant). and delivery. If you link to grubhub from your restaurant's website. The advertising/marketing fee is waived
None of the apps require businesses to offer items at the same price, and if they were to try an do so most restaurants would simply leave that app for one of their many competitors.
Ordering on the phone is very easy. I don't need to make an account, don't need to get out my credit card, don't need to fill out my name, email address, etc. All the restaurants I order from seem to have systems that remember the address associated with incoming phone numbers, so after the first call I don't even need to tell them my address. If I order from a restaurant frequently enough, I often don't even need to tell them what I want, because they remember that too. It frequently goes "Hey, Big Joe's Pies, same as usual?" Yep. "Paying cash?" Yep. "Okay it'll be about 20 minutes." How can fidgeting around with an app compete with that?
I think the only reason this model works is because people don’t actually know what is happening. I think if people knew GrubHub was running restaurants out of business they would consider alternative options.
They seem to have solid coverage in Manhattan.
I think it's pretty absurd that Grubhub and Uber take such a large commission for what amounts to pretty basic software.
But, I bet this site isn't getting much traction because it has no marketing budget (because it makes no profit).
Sure. Why don't you make a competitor then? Get yourself bought for $$$.
My guess is you'll discover it's far more difficult to onboard customers (restaurants are the customers) and consumers than you seem to think. Further, once it's mildly successful, it turns out maintenance is tough.
Edit: Looks like the "in a weekend" assertion was retracted.
I mean... and also an entire international coordinated delivery network, apps that work on all devices, background checks, vehicle registration and checking sites, marketing, huge expensive legal departments, etc. The original algorithm behind Google search was also "pretty basic software" but there's a lot more that goes into building a successful product than writing some code.
So Uber does this but grub hub/seamless does not? The delivery folks who work for the restaurant do the deliveries for seamless and grub hub orders, at least in the NYC area.
Edit: I see now that grub hub has gotten into the business of managing the delivery as well, at least in some cases.
There is no money to be had in actually being on the hook for having the assets to do the work. It's way easier to pawn off the depreciation to the naive sub-contractor, and pocket the middle-man's cut.
This is the key behind almost every commercial "tech" innovation. Exploit economies of scale by positioning yourself to extract fees from transactions that were not previously subject to having fees extracted. If that means facilitating more transactions than otherwise would have before so be it.
Stopping right there is enough seemingly for many business minded folks in the sense that new transactions = good; but I'm starting to realize there is definitely such a thing as toxic transactions, and it seems way more difficult for some reason to get this across to folks.
Then again, I'm getting older,and the rest of the world is becoming by and largeyounger than me. So that perspective may have more to do with me being a poor communicator than anything else.
Why does a local restaurant care about an international delivery network?
apps that work on all devices
If by all devices, you mean iPhone and Android. Some services like Uber Eats are either not available in a browser or offer reduced functionality in the online version of their service.
background checks, vehicle registration and checking sites
It has been demonstrated many times that this is not true.
marketing
Marketing of a third party service, yes. Marketing of restaurants, no. Thus, this point is useless and arguably even detrimental to the restaurant.
huge expensive legal departments
Which does not provide support to the restaurant and thus is useless to the restaurant.
In fact, all these apps offer restaurants are vastly increased costs for minimal if any benefit.
I'm already in the middle of it every time I eat out- having to add an arbitrary tip to the end of the my bill and always get surprised because I'm supposed to sit there and increase everything 10-20% of the menu prices.
Then I order groceries from walmart online and they try to bug me to add a $10-20 tip for every order that arrives.
Screw all of that. If the restaurants are paying too much, then they can figure it out. It's not my problem.. I'm done with it. Just show me what it costs.. telling me to go to the restaurant instead of using a service is ludicrous and pretty much defeats the purpose of delivery.
When I ordered from Costco last week, you know what they did? Increased all their prices so it included all the extra work. That way every item I ordered I could see exactly what I was paying- I didn't have a choice, which is great. I don't want the choice.
It charges an additional 15%+ for the marketing component (to get your restaurant listed and to appear higher up in search rankings).
In other words, if a restaurant sources their own customer and only uses Grubhub for delivery, they only pay 10%. This charge seems reasonable when compared to what it costs to have an inhouse courier.
30% of the bill seems to basically be what it costs to move most orders to their destinations.
It's also pretty clear that delivery as a function doesn't scale linearly with check value...
We're not "an eatery discovery app" as our app is generally used by a single end user with a single brand (a sort of pseudo white-label) but we do service a similar market and are low priced relative to GrubHub. We don't do delivery but we do click&collect, online ordering solutions, cashless transactions for gift and loyalty, branded PWAs, Clover&Poynt integrations. Employee owned.
https://www.gloriafood.com/pricing
"We understand that your restaurant's profit margin is already low and we don't want to reduce it even further with fees or commissions. That's why we offer this simplified, do-it-yourself ordering platform for free.
However, we do have (and continue to add to the platform) premium features that are more complex, that you can choose to pay for (if they bring extra value for your business). For example: online payments, promotions, sales optimized website, branded mobile apps."
Small business pizza focused app, and takes much less than the 30% the other apps take to help these businesses succeed
If you live in NYC, this nonprofit helps you find restaurants still open and order directly. Restaurants keep 100% of commission. I use it to order food every weekend. Local restaurants seem to really appreciate it.
I thought it was the owner not wanting them to take the rip but sure enough there was no sign of GrubHub going there. Calling them resulted in being connected to an offshore call center that said that we shouldn't cancel it is "in progress" but the projection was still over an hour later after we had been waiting 45 minutes. We finally cancelled and went there and got it ourselves. The restaurants I frequent often and know the owners I just call them or use their chow-now powered site. It is much more fair that way. Also saves the unpredictability of the whim of gig workers.
Transaction fees aren't new, and merchants typically bake that into the cost of doing business. Ostensibly, the end user would have to pay more for the convenience of someone else using their labor to deliver them food.
For example, from Uber's terms for UberEats restaurants[1]:
"Notwithstanding anything to the contrary in this Section 5, Merchant may not make any Item available to Customers through the Eats App at a price that is higher than the price that Merchant charges in-store for similar Items. Merchant agrees that you will not make an Item available under this Agreement at a price higher than the amount Merchant is charging for similar Items through any comparable platform for food delivery services."
[1] https://www.uber.com/legal/en/document/?country=united-state...
Edit: Even more interestingly, I rarely see this behavior on GrubHub. Maybe they have a history of enforcing it? Or are just more explicit about the rule? Or just coincidence? I'm not sure.
Isn't that why discount for cash exists at gas stations etc? To get around these sorts of policies from the credit card companies.
However, they don't charge more on UE than they do on competing delivery apps.
Also, the attorneys general of CA and NY have begun investigating these app pricing policies, so it's very likely they'll be deemed illegal by the end of the year.
The sales funnel is pretty valuable, and they’ll cut you off/derank you if you undercut.
There is also a contract but I don’t think that’s the main motivator.
Restaurants are banned by these services from charging more. So they end up eating the 30% delivery fee.
My accounting is here (I mainly focused on the fee structure but the base food cost is there too)
At least for restaurants which don't offer delivery themselves (which is the vast majority), the delivery service may be creating more than 30% of the value of the final product. "A meal delivered to me from any restaurant within about 3 miles" is often a different product than "A meal that I need to spend 20-50 minutes going to and coming back from." Although they're similar, they aren't always substitutes for one another.
Obviously the adoption of delivery speaks for itself, but beyond that, I think if one just asked buyers how much of the value is provided by the delivery company, many or most would say over 30%. The target market does not consider it "just delivery."
Some places, like bakeries and ice cream store can let people pick up orders, but food trucks for example can't, they must operate with doors (and windows in case of food trucks) closed and only send orders with delivery services of some kind.
And yes, delivery companies are expensive, a food truck owner I often chat with about business told me iFood charges them 30% of the total value, some restaurants then opt to have high food price, others just charge a lot for the delivery service, even then they might lose money (for example of they charge 5, but you buy only low margin dishes that cost 100, they lose money)
The margins on restaurants are already very small.
Instead (at least in my experience) charge more for items purchased via DoorDash/Uber Eats.
In effect you get a discount for ordering and picking up.
Advocating for cutting out the ordering/delivery company and delivery person is akin to cutting out the waitstaff since those are the ones taking your order and bringing it to you.
A few stores locally have "we deliver" type messaging, but it's really just grubhub :(
Given the higher volume provided by Grubhub, I assume using Grubhub is a net positive, isn’t it?
Edit: not employee