Monday, July 26, 2021

Delivery Platforms and the Cost to Restaurants

The era of the app has enabled people to get pretty much whatever they want with the push of a button. That applies to food as delivery platforms are growing and flourishing by the day. While that is a benefit for consumers, it can be a detriment to independent restaurants


Third-party delivery platforms like Grub Hub and Uber eats have taken off over the past year. However, there are fees involved to utilize this service. The consumer pays fees but so do restaurants. That means restaurants are only getting a fraction of the total amount paid to a delivery platform. Supporting a third-party platform does not necessarily support the community.

There is also a lot of competition. Many restaurants are forced to sign up for these delivery platforms as there is just not enough business to go around due to all the restrictions in place because of the coronavirus. Independent restaurants must now compete with large corporations who can afford these fees and not be threatened with going out of business. And in a climate where the number of diners has decreased, restaurants are forced to find any new means of reaching consumers.

Some states have attempted to place a cap on the commissions of third-party meal delivery services. However, those caps are far and few between as it allows delivery platforms to gouge restaurants. And if this continues for the long-term, many independent restaurants will have to close. There is a cost of putting out quality food with quality ingredients and seeing only a minimal return. There is just enough potential for independent proprietors in this type of environment.

The more these delivery platforms become a common part of everyday life, the more they threaten independent restaurants.  And even if things begin to return to normal, many people could get used to these delivery platforms. They could quickly become a way of life and that bodes poorly for independent restaurants. That not only impacts restaurant owners, but the entire contingent of employees who depend on that industry to survive.

Limited capacity dining in restaurants is another open door for delivery platforms to swoop in and start to gain a stranglehold on the dining industry. The last year could be a catalyst for a dramatic change to eating out. And if that does indeed persist, the independent restaurant could be heading for extinction. Meanwhile, delivery platforms will contribute to complete reshaping the American dining experience.