Food Delivery Apps: Robin Hood or Prince John?
May 14 2020

Food Delivery Apps: Robin Hood or Prince John?

By: Graham Andreae

When they needed to find customers without opening their dining rooms, many restaurants began to offer delivery service to their loyal clients, through companies like Grubhub and UberEats. In so doing, food delivery apps helped introduce communities to smaller businesses and lesser-known restaurants. But there might be a catch. The fact remains that a service like Grubhub or UberEats takes a cut for providing drivers to small businesses. These drivers function as the means by which the small businesses, which would otherwise be closed, maintain a steady—if diminished—revenue stream.

The reality is this: Although small businesses are getting some revenue, they are not getting nearly the revenue that they need to survive. According to reporting by Yahoo, Giuseppe Badalamenti, a major business owner in Chicago, reported the disparity between income brought in and the amount that the restaurant actually receives at the end of the transaction. The Chicago Pizza Boss owner released a photo of his income, which went viral, showing how buying your food from a third-party provider is not actually helping small businesses.

This is the result of numerous fees that are heaped on the backs of small businesses: a processing/fraud protection fee (4%), a marketing fee (the average rate is 15%, but business owners can opt to pay up to 20%), and an optional delivery service fee, at 10%. These are all built into the price for consumers, to be sure, but also for small businesses.

This becomes critically important in times like this when small businesses need every bit of income that they can get. These services and the income provided are stopgap measures that could be damaging to businesses who have no choice but to pay up or go under.


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