Delivery services cut into local restaurant's bottom line

Posted at 7:35 PM, May 29, 2020

Local restaurant owners are doing everything they can to hold on during this pandemic, but the services in place that help them serve us while still social distancing can take a toll on their bottom line.

Delivery services like Grubhub, Uber Eats and Postmates are great ways to get the food delivered to your door, but as more and more orders come through those services it can mean less money for the restaurants.

Alexa Alfaro of the Filipino restaurant and food truck Meat on the Street said they've had to raise prices to help off set some of the additional costs of delivery commissions.

"They're anywhere from 20 to 33 percent," Alfaro said. "Which is crazy. It's still cheaper than, I think, hiring in house delivery services in terms of insurance purposes."

While cheaper than an in house hire, she normally would only pay commissions that high to park at large events with lots of foot traffic.

"Any time we take the truck out anything that charges 30 percent or even 20 percent is typically like a Summerfest setting," Alfaro said. "100,000 people are going to walk past you're place. It's worth it."

For her restaurant, Postmates charges a 21 percent commission on each order. Uber Eats charges 30 percent and Grubhub charges more than 33 percent.

In a statement, Grubhub told us in part, "Our platform is free for any restaurant owner who wants to join since we have a fee-for-service model. If a restaurant wants us to deliver on their behalf, there is a 10 percent fee to provide this service that is used to pay the driver and cover the logistics of Grubhub’s drivers transporting the food from the restaurant to the diner. This is optional; a restaurant can choose to perform its own delivery. But the costs associated with delivery are not optional."

Postmates told us, "Commissions are privately negotiated agreements between the restaurant..." adding, "Commissions are not “fees”, they are the main source of revenue for our company and they are how we pay for the services that we provide..."

And Uber Eats reiterated that they offer the delivery service so that the restaurant does not have to hire someone.

Kristine Hillmer, president of the Wisconsin Restaurant Association, said delivery services deserve their cut. But to help protect restaurants, she asks customers to contact owners to find out what the best option is for them.

"Contact the restaurant directly to see how that is done, they will tell you how to best get their food, whether it's through a company, they have contracted to do that or with or their own staff," Hillmer said.

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