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Maybe online delivery is not a good idea

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As salespeople from online delivery services call your business with the intensity of 30 – 50 feral hogs, here are some things to consider

Online delivery is yet another example of technology “disrupting” the restaurant industry. The idea is simple enough: instead of employing couriers, restaurants can contract delivery out to a startup. The restaurant can reach more customers and sell more food, but they won’t need to spend money on promotion or additional employees. The reality has been far less straightforward as delivery apps are generating criticism for high and unexpected fees to restaurants, less-than-progressive labor practices, and the occasional complaint of missing food items from customers.

So with all that in mind, should you sign on? Here are a few things to consider…

Delivery services’ fees to restaurants can be high (and confusing)
Looking for fee structures to restaurants isn’t as straightforward as checking in on the various services’ websites. UberEats only says, “We collect a service fee, which is calculated as a percentage of your sales on UberEats.” (https://www.ubereats.com/restaurant/faq ) A restaurant has to fill out a form to find out more.

Grubhub isn’t very transparent either. Some google-foo did eventually lead to a PDF that listed out several fees: Marketing commission at 20%, Delivery Commission at 10%, Processing Fee at 3.05% + $0.30, Delivery Tip at 15% and any applicable sales taxes (their example is 8%). Total all that up and in their example, they charged the restaurant 34% of the order price.

DoorDash follows the pattern and doesn’t clearly state its fee structure on their website (we even dug deep into the FAQ and help pages). We once again resorted to googling it and found enough references to a range of 22.5% to 30% to take that as the credible number. Caviar, recently acquired by DoorDash, also does not think to include the cost to restaurants on their site. It’s safe to assume they charge something close to what DoorDash does – or will begin to soon.

Our conclusion: You’ll have to do your research and talk with any potential delivery services’ salespeople to learn the actual costs involved. Take lots of notes during the sales call and don’t commit until you have a chance to run the numbers for yourself.

Even if you think you understand the fees, there can be more fees
Grubhub, in particular, has come under fire for how they charge fees to restaurants. Under their model, they collect marketing fees when a customer orders through Gubhub’s app or any of its marketing channels. Those “marketing channels” include fake websites Grubhub set up to bring in more customers – and to charge more fees. In many cases, restaurant owners weren’t even aware Grubhub had set up a website for their business. Grubhub later denied the allegations, stating they retained the right to create websites under the language of the contract signed by the restaurants. Even if this is a provision of the contract, it’s not a good look.

Another Grubhub “marketing channel” is a phone number they push to Yelp. When a Yelp user looks up a restaurant, they are shown two different phone numbers for the business. One is to ask general questions (that’s the real phone number) and the other is to place an order (that’s a Grubhub number). When a user selects the Grubhub number, the restaurant is charged a fee – in some cases even when no order is placed. Just as with the websites, this is all in the contract restaurants signed when agreeing to use the service.

Our conclusion: Always read the fine print. Delivery services are not motivated to be upfront about their fees.

The drivers might have their reasons to be disgruntled
As recently as the end of July 2019, DoorDash didn’t pass tips directly along to their drivers. Instead, they used the tip to pay a portion of the money they owed to the driver. For example, if a driver was told a delivery would net them $6 and the tip was $3, they didn’t get the $9 that the customer was charged. Instead, DoorDash took the $3 and used it to subsidize the $6 payment. If the customer didn’t tip, DoorDash covered all $6 on its own.

DoorDash responded to criticism by claiming the drivers received 100% of their tips, which was technically true – but since they subtracted the tip from the driver’s base, the result was the same as if they weren’t.

On July 23, 2019, DoorDash CEO Tony Xu announced a change to the tipping policy on Twitter. Drivers’ “earnings will increase by the exact amount a customer tips on every order,” Twitted Xu. “We’ll have specific details in the coming days.” While we’re all sure that statement is also technically true, at the time of this writing, we were unable to find any details of the new policy.

Our conclusion: DoorDash isn’t alone in its questionable labor practices. Other delivery services are just as dependent on cheap on-demand labor. While your interactions with the drivers may be minimal, they are likely struggling to make ends meet.

The drivers are eating the food
In a survey conducted by US Foods, nearly 27% of driver admitted to snacking on the food. While this is nearly understandable, given the low pay involved, it’s still a huge problem. When a driver snacks on a chicken wing, it’s the restaurant that is likely to get the complaint. For the most part, customers are likely to think the restaurant forgot or mispacked that part of the meal.

When a restaurant serves food, it gets to control the guest’s experience – even for take-out. But when you hand off delivery to another company (and that company hands off the task to a contractor) you’re also giving up the ability to ensure that guest experiences are positive from door to door.

Our conclusion: Drivers are going to snack on the food; plan accordingly.

Signing up with a delivery service is a complicated decision. You may decide it’s a good fit for your business, but it’s important to know the downsides before taking a sales call from Grubhub or Caviar. If you have had a good experience or a bad experience with delivery, let us know in the comments!

Jack Hott

Jack Hott has more than 20 years experience in the hospitality industry. Along the way he’s flipped burgers, tossed pizzas and spilled a lot of wine on white table cloths.

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