Delivery Apps Refuse to Temporarily Decrease the Fees They Charge Restaurants

As the restaurant industry weathers the coronavirus crisis, diners have been encouraged to support businesses by ordering food for delivery. It’s a rallying cry that’s been taken up by delivery apps like San Francisco–based companies Postmates, Doordash, and UberEats, all of which are actively presenting themselves as the solution for restaurants that are struggling to survive. But according to the Golden Gate Restaurant Association (GGRA), a lobbying group that represents local restaurants, when they approached these Bay Area tech companies to ask if they’d give their hometown restaurants a break, the answer was a resounding “no.”

The narrative that delivery apps can save restaurants is one that’s been so enthusiastically embraced by the companies that some have launched full advertising efforts touting themselves as the way diners can support their favorite local spots. Postmates, which was founded in San Francisco in 2011, has even launched a star-studded campaign called #OrderLocal, AdWeek reports, featuring celebs like Mindy Kaling, Tiffany Haddish, and Cara Delevingne, all of whom name their favorite restaurants and encourage delivery orders placed, of course, via Postmates.

“You don’t want to come out of this tough time and find that all your favorite small businesses are closed,” Kaling says in her appearance on the spot. (It’s arguably a turnaround from mid-February, when she complained that food delivered by Postmates “always takes twice as long as advertised and is ice cold.” What a difference a pandemic makes!)

It’s those “favorite small businesses” that could most benefit from a temporary discount in commission fees from delivery apps, says Laurie Thomas, executive director of the GGRA. She’s been in talks with Postmates, Doordash, and UberEats since before the crisis began, as even then local officials were looking at ways to regulate commission fees charged to restaurants. Business owners already said the cost they pay to be on the apps — typically, 20 to 30 percent per order — made their thin margins unmanageable.

Thomas says policy people from these SF-based apps have been reluctant to decrease the charges they demand of restaurants, claiming they couldn’t afford to ask any less from restaurants and remain in business, themselves. But after Thomas learned that, as noted by the SF Chronicle, some of those same companies were temporarily offering low- or no-commission charges for restaurants new to the platforms, she circled back.

“Some of the restaurants that have stayed open are running in the red,” Thomas says, “and their owners have run the numbers and said that just a 50 percent decrease in the commissions would let them stay in business and keep their workers employed.” So earlier this week, she got back in touch with reps from Postmates, Doordash, and UberEats, and asked all of them if the company would offer a 50 percent “rebate” on the commissions they demand of restaurants during the Bay Area’s shelter-in-place order. All of them refused, she says. (Representatives from the delivery apps have not responded to Eater SF’s request for comment as of publication time.)

So, while (per the Chron) “Postmates is temporarily waiving commissions for San Francisco food businesses that wanted to join its service,” and DoorDash and its subsidiary Caviar “are allowing restaurants to sign up and are not charging commissions for 30 days, lasting through the end of April,” restaurants that were already on those companies’ apps won’t receive any sort of break at all, Thomas says. That’s even though, she says, “that 50 percent rebate might be the only thing that can keep the lights on right now.”

While not the 50 percent rebate Thomas was hoping for, a DoorDash spokesperson who contacted Eater SF following this article’s publication says that the lobbyist who spoke to Thomas wasn’t precisely correct. The company announced last month that orders placed via DoorDash or Caviar for in-restaurant pickup by the customer would not have commission fees, and that restaurants that join its DashPass program (its $9.99/monthly subscription delivery service) would have commission fees placed vis that feature decreased by 3 percent.

Thomas says that in her experience, in-restaurant pickup via apps like DoorDash are rare, and that for her restaurant, the commission fee would run about 10 percent. A DoorDash spokesperson declined to comment on what the typical commission fee for pickup orders might be, or on what percentage of orders on its platform are pickup as opposed to delivery, but said that the program changes offer “significant savings for our restaurant partners.”

Nonetheless, “the math doesn’t work” for most restaurants to stay open and hand 20 to 30 percent to delivery apps, Thomas says. It’s an assertion that suggests that spots might eventually have to close up during the shelter-in-place, with the hope of reopening afterwards. That’s a decision that might end up costing delivery apps even more in the long run, if those companies thought ahead. After all, if there aren’t any restaurants open to deliver food from, even that discounted 15 percent commission would drops down to zero. That’s math that suggests that Postmates, Doordash, and UberEats’s reluctance to offer a temporary rebate on commissions might mean that they’re either playing a game of chicken with restaurants — or that they’re willing to kill the geese that would otherwise continue to lay golden delivery eggs.

Update: April 4: 5:05 p.m. This article was updated to include additional information provided by a DoorDash spokesperson, and a response to that information from Laurie Thomas.