Restaurants Seek Delivery App Options

Local businesses band together to offer alternatives to the pricey, name-brand delivery platforms.

October 27, 2020

ALEXANDRIA, Va.—Adam Fry, owner of a Washington D.C., eatery, turned to delivery app Grubhub when the pandemic arrived and his customers were locked down at home. “Within about a week we saw, based on our revenue, our total profit actually decreasing,” Fry told So, Fry and fellow Ivy and Coney co-owners Chris Powers and Josh Saltzman launched their own delivery service geared toward D.C. establishments.

Named DC To-GoGo, the service has a mobile app and web-based marketplace for pickup and delivery. It also offers third-party delivery for any restaurant with its fleet of couriers. “We wanted to model a business which was largely built on No. 1 transparency, No. 2 living wages and No. 3 working within the restaurant ecosystem,” Fry said.

While the major food delivery apps have positioned themselves as supporters of local restaurants—urging patrons to help keep the eateries afloat during the pandemic—many foodservice operators complain about the service provided and excessively high commission fees on orders that leave little margin for profit. These concerns have only been aggravated by the COVID-19 crisis.

“The costs of operating a restaurant are enormous, and upgrading and pivoting to takeout is extremely hard,” said Maureen Tkacik, a senior fellow at the American Economic Liberties Project. “So, paying these fees to delivery apps is just totally ruinous.”

Foodservice operators have few options. Grubhub, Postmates, Doordash and Uber Eats, along with their subsidiaries, account for 98% of all meal delivery sales, according to one estimate based on September sales. That situation could become more pronounced if Uber’s proposed purchase of Postmates gets regulatory approval.

“Any given market is often dominated by two or even one of them,” said Stacy Mitchell, co-director of the Institute for Local Self-Reliance, a nonprofit group that advocates for local resources. “They’re corralling customers and then using their gatekeeper power to extract from restaurants.”

Unlike with the dominant delivery apps, DC To-GoGo’s drivers are full-fledged employees with fixed hours and incomes. Many are former restaurant staff that lost their jobs early in the pandemic. The company takes a 5% commission on pickup transactions, a 10% commission on deliveries that restaurants facilitate themselves and a 15% commission on orders using the DC To-GoGo’s fleet, plus delivery fees. More than 30 restaurants have already joined the platform.

Other services offering similar options are popping up across the U.S. In Iowa City, Iowa, Jon Sewell has taken a similar approach built around restaurants supporting restaurants since 2017. Sewell created Chomp to compete with Grubhub, which had been the dominant service in the city since it acquired local competitor OrderUp. Chomp works a lot like a cooperative. Restaurants sign up for the service and pool their resources to hire delivery drivers. Members own a slice of the company. The restaurateur has his eyes set on expanding that model nationally.

Local leaders in Durham, North Carolina, are taking a different approach to helping restaurants deliver food. Durham Delivers, a product of the city’s coronavirus recovery and renewal taskforce, works with communities to organize bulk meal deliveries at no cost to the consumers or restaurants. Additionally, last year, David Cabello launched Black and Mobile, an app that exclusively partners with Black-owned businesses, after he noticed that many Black-owned restaurants were absent from the major delivery platforms.

Coronavirus Resources

NACS has compiled resources to help the convenience retail community navigate the COVID-19 crisis. For news updates and guidance, visit our coronavirus resources page.