Big third-party delivery services take significant cut from restaurants
Since the start of the pandemic, delivery and pick up services have become the new normal for dining out. Most restaurants have had to adapt to this new normal to remain in business by pivoting their operations. As a result, to reach out to customers and deliver orders, many restaurants have signed up to third-party delivery services like UberEATS, SkipTheDishes and DoorDash.
During these difficult times for local businesses, you might think using these services to order from local restaurants would be a good way to help them out — but that’s not exactly the case.
Chain restaurants (McDonalds, Harvey’s and A&W) are featured on these apps along with local restaurants, however, major chains are featured more prominently than local restaurants.
Upon opening the app, UberEATS lists both types of restaurants on the home page. Near the bottom of the home page was a list specifically suggesting local restaurants.
Customers know that these apps charge fees for delivery but they also charge the restaurants commissions on orders. This can usually be between 10 to 30 per cent of the order price, which takes up most of the profit made on orders.
To address this, some restaurants have started putting notes in orders telling customers where their money goes when they order through third party services.
The King Eddy in the Byward Market, for example, invites customers to place orders through their Instagram page or their website, reducing the commission from 30 per cent charged by UberEATS to 7.5 per cent for orders made directly with them.
Drivers are also not treated fairly. Some delivery services categorize their drivers not as employees but as freelancers or independent contractors to not have to pay minimum wage or benefits. Some companies charge fees designed to make customers think that drivers receive them, when in reality, the company keeps them.
So what are some possible solutions? Eliminating third-party delivery services altogether by placing an order with the restaurant directly for pick-up is probably the best choice. If you want to discover somewhere new, use the apps to find the restaurant and menu, then place an order with the restaurant directly. Doing this saves you money on the various fees charged on orders, saves the restaurant from paying commission and you also know your tip is going to the restaurant.
If you still want delivery, there are alternatives to these major delivery services. More locally centered competitors have started popping up since the start of the pandemic promising to offer a better deal to restaurants and drivers.
Love Local Delivery proposes a better deal for local Ottawa restaurants by charging them a flat $2 fee per order and a $5 fee to clients within a 5 k distance from the restaurant. Plus, they only deliver for local restaurants, so no major chains are showing up before local businesses in the search results.
A newly launched app called Getit Local also promises to charge less for local restaurants to use their service.
The Ottawa Citizen reported during a three-month trial period, restaurants are charged a flat monthly rate of $99, with no pickup fees on orders. No chain restaurants are on this app either.
Delivery apps should not be charging restaurants so much to use their service. To help local businesses, customers should opt for ordering directly with the restaurant for pickup, or choose a delivery service that promotes local businesses, charges restaurants less and that treats its drivers more ethically.
