Restaurants are facing a crisis. As local governments ban the sales channel of “dine-in” traffic, restaurants need to make money to survive through the “online” sales channel of pick up and or delivery. If profitable restaurants are averaging a positive margin of 15%, and with Grubhub, UberEats, Postmates charging on average 30%, if a restaurant relies on these apps as their only way of getting business…a restaurant will not make money. The argument many delivery apps previously made is that even though most restaurants aren’t profitable. with delivery orders coming through the apps, they instead need to think of the delivery app marketplaces orders as “marketing” for their dine-in experience. Any argument that restaurants should use delivery app marketplaces doesn’t work anymore. That’s math.
The prominent vc backed food delivery app Grubhub created a PR campaign covered by many journalists suggesting that Grubhub services would not charge the restaurant a commission…knowing that many smaller family restaurants are scrambling and wouldn’t read the fine print. However Grubhub deferred fees actually do charge the restaurant a commission…just the commission is delayed. Eater magazine was the first major outlet to bring this to everybody’s attention, and I encourage restaurant owners to be very aware of the fees that the delivery services are charging you and customers. Read the full story and check out their in-depth article. I also encourage restaurant owners to consider running their own no commission direct food ordering system and to start recognizing that this is now something that can not be ignored.