Restaurants: are pickup and delivery the new trends?

Tuesday, 27 July 2021
Delivery with Uber Eats, an online food ordering and delivery platform launched by Uber. Delivery with Uber Eats, an online food ordering and delivery platform launched by Uber.

The pandemic paralyzed many industries, but restaurants faced a particularly difficult year. While dining dropped dramatically, food delivery saw tremendous growth. DoorDash and Uber Eats, the two largest delivery apps by market share, both saw their business double from the end of 2019 to the end of 2020. As of February 2021, DoorDash held by far the largest market share in the U.S.; but some cities have their own favorites, such as Uber Eats in Miami and Grubhub in New York. Restaurants are relying on these delivery apps more than ever.

How delivery apps have changed the restaurant industry.

DoorDash by itself delivered 543 million orders between January and September 2020. In an economy where there are about 9.5 million fewer jobs in February 2021 compared to February 2020, the flexibility of food delivery as a job can be beneficial.

While the delivery boom has provided new jobs for drivers, restaurants have faced some challenges. Delivery apps charge fees to restaurants in order to make money. Uber Eats charges about 350 dollars in setup and equipment fees, plus a 15- to 30-percent commission for each delivery. Grubhub charges a 20 percent marketing fee, a 10-percent delivery fee and a 0.30-cent processing fee plus 3.05 percent.

DoorDash said the company does not disclose specific fee amounts as the company offers a variety of services to sellers. These fees translate into higher food prices for consumers as well. There is the price of the meal you would receive if you physically went to a restaurant. The price usually goes up when restaurants offer food on these apps. Then come delivery fees, which are sometimes covered by subscriptions like DashPass and Grubhub, and service fees. There are also regulatory fees that companies, including DoorDash and Uber Eats, added to their accounts after cities like New York capped delivery fees at 15 percent.

After cities and states banned indoor dining in March 2020, restaurants across the country had to find new ways to stay in business. The majority of online orders come from third-party apps like DoorDash, Grubhub and Uber Eats. According to an analysis, nearly half of U.S. consumers used one of these food delivery apps in February 2021. The demographic trend is still pickup and delivery.

To help businesses in the early months of the pandemic, Grubhub suspended fees for independent restaurants in some major cities, Uber Eats waived delivery fees for more than 100,000 independent restaurants in the U.S., and DoorDash offered zero commission on pickup orders and implemented a $20 million merchant marketing program, among other initiatives.

Prior to and during the pandemic, U.S. restaurants could pay up to 30 percent in commissions for these delivery apps, in addition to other fees such as marketing and delivery costs.

Sources: Washington Post, The New York Times, Consumer News and Business Channel, Uber

Read 105 times Last modified on Tuesday, 27 July 2021 07:44
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