The Call For Food Ordering App Reform: How You Can Help

By June 16, 2020 News
CHI Blog

The Call For Food Ordering App Reform How You Can Help

Restaurants across the country were among the first to feel the financial blows of the COVID-19 outbreak. With dine-in services prohibited since mid-March, many of Toronto’s cherished food spots have turned exclusively to delivery and takeout orders in the struggle to keep their doors open.

Since the onset of the pandemic, apps like Uber Eats and Skip the Dishes have reached out to restaurant owners with a promise to fulfill the influx of carry-out orders — the only catch being double-digit commissions.

Restaurants who were once grateful for any incoming cash at all are now questioning whether they’d be better off without the “help” of a third-party app, which, in quite a few cases, has led to losses rather than profits.

Third-Party Food Delivery Apps Are Cutting Too Deep

The fees charged by these apps range anywhere between 25 to 40 percent of what restaurants are asking of their customers—rates that are far too steep for any small business to keep up with. When multinational companies like UberEats and Skip The Dishes are knocking off almost half of every dollar earned by a restaurant, it’s no wonder their profits are quick to dip below zero.

For restaurants that are new to the delivery game, the COVID-19 pandemic has dealt blow after blow, piling the cost of investing in tamper-proof packaging on top of hefty commission fees—all while dining areas have remained packed up and cordoned off.

While UberEats has reduced commission fees for restaurants sending out their own delivery people or in cases where customers opt for pick-up instead of delivery, restaurant owners are saying it’s not enough. Other takeout apps have taken more drastic measures, with DoorDash slashing commissions in half and Skip the Dishes offering a 25 percent rebate.

Restaurants are disappearing. The more time we spend under lockdown, the harder it is for our favourite establishments to keep their heads above water. As restaurant owners face yet another month’s rent without any new income, they’ve reached a point where the looming question is whether they can keep going, rather than if they should.

Calling for Government Action

Restaurants in Toronto are now calling upon the City of Toronto to enforce lower commission fees on behalf of food delivery apps that haven’t already done so. Major John Tory has publicly addressed companies like UberEats, imploring them to consider reducing their rates to help restaurants see the other side of quarantine. Stephanie Dickison, Owner and Founder of Toronto Restaurants has created a Change.org petition calling on MPPs to support a delivery fee cap that has over 4,600 signatures. You can get involved by signing and sharing this petition and also writing to your local elected official.

Major cities in the US, including San Francisco, Washington, and Seattle, have temporarily restricted delivery app commissions to the 15 percent range. For small businesses struggling to turn a profit, mandates like these—even while temporary—keep them from shuttering their doors for good.

Disappointment in Food Delivery Apps

As people remain cooped up in their homes all day, week in and week out, takeout orders have surged like never before.

The choice for a restaurant to partner with a third-party food delivery app seems like an easy one. Platforms like DoorDash and Skip the Dishes have access to millions of users across the country. These apps have a lot of power and the advantage of familiarity and comfort for many diners. In fact, if a customer does not see the name of a restaurant they are looking for on one of these apps at the time they search, they are likely to simply move onto another restaurant within the app or worse, it may lead them to assume that they’ve shut down. Apps ensure that orders are communicated clearly, and staff is available to complete them—but these services come at a hefty cost.

With dining areas all but abandoned, restaurants have turned to third-party food delivery apps as a lifeline—and have been disappointed by excessive commission fees and technical fumbles. On the last weekend of April, the UberEats app experienced an outage across much of Toronto that lasted an entire 48 hours.

In combination with one of the app’s restrictive policies, which prevents customers from tipping restaurants more than $2, this incident has left restaurant owners with a bitter taste in their mouths. While the company has offered compensation for unfulfilled orders and are handing affected customers $25 promotion codes, many restaurants and customers alike have switched to other food delivery platforms.

Out With the Old and in With the New: The Future of Food Delivery

As companies like UberEats face mounting backlash, Canada’s app-based food delivery scene is ripe for change, especially with Foodora’s recent departure.

Foodora, which launched in Canada back in 2015 and has since expanded across 10 Canadian cities, withdrew all operations from the country on May 11, citing insufficient profits. In recent months, the company had been waging a high-profile war with its own delivery drivers regarding their classification as employees rather than independent contractors.

While UberEats and its top competitors Skip the Dishes and DoorDash will be able to fill the gap left by Foodora’s exit, startups now have the chance to completely alter the way food is delivered. With an increasing number of people eager to boycott companies with steep commission fees, the potential for success of more forward-thinking solutions is clear.

The public outcry is motivating some exciting innovation in this tech space. Services like Ambassador are jumping to the rescue of restaurant owners to help them keep more of their profits. Ambassador offers an ecommerce solution that can be embedded directly into a restaurant’s website and instagram without the use of a third-party app.

Will Food Ordering Return to Normal?

While we wait for the City of Toronto to implement measures that would protect local restaurants from being held hostage by massive companies, customers have been skipping the middleman and phoning restaurants directly for pick-up and delivery. From their point of view, the extra step is worth it to protect our city’s most vulnerable establishments.

Once social distancing procedures have relaxed and restaurants can finally breathe again, the best way for customers to support local restaurants is to revisit their favourite joints, take a seat, and have their order taken in person.

Are you interested in learning more about new trends in Canada’s ever-evolving restaurant industry? Get in touch with the team at CHI Real Estate by calling 647-347-9723.

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