Deliver Me from High Delivery Fees

ALEXANDRIA, Va.—McDonald’s has ended its exclusive delivery partnership with Uber Eats begun in 2017 and added DoorDash as a second delivery service, according to Nation’s Restaurant News.

The mega-chain will begin testing DoorDash services at 200 Houston outlets this month, with plans to expand DoorDash beyond that area. Uber Eats, which delivers from about 9,100 McDonald’s restaurants, will remain a provider nationwide.

DoorDash has had recent wins in the delivery business with a 189% year-over-year jump in sales, compared with Uber Eats (32%) and Grubhub (6%), reports Second Measure, a firm that analyses U.S. consumer spending. A McDonald’s spokesperson said adding a second delivery service does not reflect negatively on the performance of Uber Eats, but that the company wants to be able to deliver wherever customers are.

McDonald’s will be a part of DashPass, a DoorDash subscription service where members get delivery fees waived on orders of $12 or more.

However, not everyone is happy with the food-delivery services. According to another Nation’s Restaurant News story, U.S. Senate Minority Leader Chuck Schumer has joined in the ongoing dialogue between New York restaurant operators and Grubhub, calling for a Small Business Administration investigation and report to Congress.

Earlier this week, Schumer held a news conference in front of a Manhattan burger restaurant to discuss how the recent Manhattan blackout had an impact on small businesses, including restaurants. But he also took on another hot topic: complaints that Grubhub is charging businesses “fake fees.”

Grubhub, part of the same company as Seamless, has been accused of charging restaurants for phone calls made to the restaurants through the company’s app, even when those calls don’t result in an order. This includes calls from customers asking questions about a menu item or making a reservation to dine in. The Indian restaurant chain Tiffin, which has 12 locations in the Philadelphia region, filed a lawsuit in January seeking class-action status in order to include many of Grubhub's 115,000 restaurant partners. 

“Today, I am putting in my own order at Grubhub and asking them to eat any fees they wrongfully charged restaurants or even customers,” Schumer said.

Responding to Schumer’s statements, a Grubhub spokesperson said, “We welcome the opportunity to work with Sen. Schumer, the U.S. Small Business Administration, and others to show our proven commitment to the restaurant community and disprove the flagrantly inaccurate narrative that our business practices are misleading or lack transparency […] We will continue to highlight the value we bring to local restaurateurs and to directly disprove false allegations about our business that have recently been spotlighted."

Meanwhile, Domino’s Pizza of Ann Arbor, Michigan, is lamenting it’s second-quarter sales shortfall and looking at food delivery as part of the problem.

A story in the New York Times reports that Domino’s U.S. sales at stores open at least a year rose 3% in the second quarter, which was below analyst forecast of 4.5% growth. This was the third straight quarter that U.S. same-store sales have fallen short of expectations, said Ritch Allison, CEO for Domino’s.

Domino’s has its own drivers and doesn’t work with delivery services. UberEats and GrubHub, which are rushing to attract customers using referral bonuses and other deals, have made it easier for consumers to order a wide variety of food beyond pizza. For example, UberEats has occasionally offered free McDonald’s delivery.

Domino's is opening more stores to ensure faster delivery times and increase global market share. The chain opened 158 net new stores worldwide during the quarter and 42 net new stores in the U.S. But the new stores are hurting same-store sales figures since business is spread across more locations.

“It’s an investment we and our franchisees are happy to make for long-term growth,” said Allison, who predicts declining pressure from delivery services in the future, as some companies leave the market and discounts become less frequent.

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