Published 27 April 2020
The COVID-19 pandemic has forced many food service businesses to switch to home deliveries and third-party delivery apps are seeing a surge in restaurants signing up with their business, as well as an influx of customers. At the same time, these third-party companies are coming under intense scrutiny for the commissions being charged to restaurants.
April 27, 2020 — Several weeks of the COVID-19 pandemic have passed and food service businesses are continuing to struggle as they try and find ways to make ends meet during these challenging times. From early on, businesses who were forced to close their doors to the public were encouraged to switch to a take-out or delivery model if they were able to. This allows food businesses to keep operations running at least minimally, and to bring in some form of revenue despite their premises being closed. Many food service businesses jumped onto the opportunity, with some choosing to use a third-party app to deliver their food orders to customers.
Food businesses had to make informed choices, as there are pros and cons for choosing to deliver the food with your own driver or for choosing to utilize a third-party app. As time goes on, some food businesses are arguing that the cons for using third-party apps are outweighing the allure of the pros.
Around the world, third-party delivery apps are falling under scrutiny for the commission fees that they are changing restaurants for being a part of the service. These fees can range anywhere from as low as 10% to 30% or higher. While these fees are considered manageable during normal operations, the COVID-19 pandemic has strained food businesses significantly and doing food deliveries is their attempt to stay afloat. Some restaurant owners are arguing that these fees are not sustainable and are cutting into their bottom line. Concerns are being raised and there are calls on food delivery apps to reduce their fees or put a cap in place.
These calls for action are not falling on deaf ears, as is being witnessed in several countries around the globe. In San Francisco, for example,an emergency order has been put in place by the mayor which states that third-party delivery apps must cap their fees to restaurants at 15 percent.
The same is being seen in Canada, with mayors of some big cities calling on third-party apps to address their commission fees for restaurants. For example, Toronto mayor John Tory has put out a call for third-party apps to consider lowering their commissions in order to help restaurants survive the COVID-19 crisis.
Aside from North America, other countries in the world are also seeing similar calls to action. In Australia, for example, Ben Fordham — a broadcaster for 2GB — is calling for third-party delivery services to conduct commission cuts for restaurants. Also, some restaurants in Sydney are mobilizing their own staff with motorbikes after not seeing much financial success with using third-party apps.
Despite the backlash, many restaurants are continuing to use these delivery apps due to their convenience and their ability to drive in some sales. Some food service businesses are arguing that without using these apps, they would have barely any revenue at all.
In the end, there is hope that a middle ground can be reached. Food service businesses benefit from the assistance that third-party apps bring, as well as their ability to bring a food business’s service in front of thousands of potential customers. Third-party apps are also stepping up to the plate in order to keep the restaurant industry alive — one that they work very closely with and rely on for their own business model. The two sides of the coin need to continue to come together in a way that supports both during the challenging times of the COVID-19 pandemic.