Delivery apps promised to connect restaurants with more customers. The dream isn’t working.
By Shira Ovide
More people are using food delivery apps like Grubhub and Uber Eats to order from restaurants during the pandemic. But can this trend last if so many restaurants are unhappy?
My colleague Nathaniel Popper talked to a restaurant owner in Columbus, Ohio, who was paying fees that averaged more than 40 percent of each sale to one app company. He closed and applied for unemployment.
I talked to Nathaniel about his recent article, which highlights the gap between the promise and the reality of technology to generate more customers for restaurants. The stakes couldn’t be higher, with many restaurants struggling because of coronavirus-related closings and concerns.
Shira: Isn’t keeping 60 percent of a sale better than not having that order at all?
Nathaniel: Many restaurants are realizing that they’re taking a loss on every order through the delivery apps, so those orders don’t make economic sense. Beyond the fees, many restaurants said they felt that delivery apps weren’t good partners — they found it difficult, for example, to reach delivery services to fix problems.
If I become a regular after trying a restaurant from a delivery app, doesn’t that make up for the loss on one order?
There was a hope that delivery apps would generate customers and sales that restaurants wouldn’t have gotten otherwise. But it looks like delivery apps pull people away from eating in or ordering directly from those restaurants.
Are restaurants angry at apps because they’re worried they won’t survive the pandemic?
That’s part of it. Some surveys showed that people planned to use delivery more and have concerns about dining in.If restaurants lose money on delivery orders and there are fewer sit-down customers because of local limits on dine-in numbers or coronavirus fears, the math doesn’t work for a lot of restaurants.
What’s the alternative?
Restaurants are trying options to take orders through their own websites, and use their own delivery couriers or contractors from companies that don’t take a percentage of each order.
Right now, online ordering is a small percentage of restaurant sales, but it’s growing fast. And many people look first at these big apps when they want to order food. That’s why restaurants feel like they both can’t live with these apps and can’t ditch them.
The app companies mostly lose money, restaurants complain, some couriers say they’re making peanuts and many diners don’t like hidden costs or bad delivery experiences. That’s a lot of problems!
That list of unhappy parties is something I thought about a lot. In many cases people are getting a broader range of restaurants to deliver for the first time, at what feels like a reasonable price. Sometimes restaurants absorb the cost of that. A lot of the cost is absorbed by investors in these app companies.
Do YOU use apps for delivery or takeout?
I’ve had mostly bad experiences in the handful of times I’ve used a delivery app. We mostly order from one Thai restaurant near us that does delivery itself, and that we can call if the food is late.