Home delivery apps are gutting the restaurant industry

Wondering why home delivery apps are gutting the restaurant industry?

Even the largest chains, which can negotiate lower rates, have had their nibbled profits by delivery apps.

A former Grubhub executive compared the apps to payday lenders. "They give you the feeling of cash flow, but at the expense of your financial stability and long-term future," he wrote In May.

There are other causes for concern about app companies, particularly the treatment of their legion of contract drivers who face inconsistent income and are denied medical care and other benefits from the companies. DoorDash, Uber and Postmates, among others, joined $ 200 million to back a winning ballot proposal in California last month that bypassed the legislative process and solidified a system that ensures drivers can't get employee status or other benefits like consistent minimum wage guarantees and help with vehicle costs. Since then, companies have pledged to apply similar limits to other states.

Restaurants, of course, don't have to use home delivery apps, but those who don't or who refuse to pay marketing fees to get their restaurants higher in search results find that customers are funneled to. the competition. Desperate to maintain typical profit margins of only 5 percent or less, some restaurants have responded by encouraging customers to order directly through their websites for collection. Others are sliding ruffles in drop boxes to promote less expensive options, including some startups that charge lower fees.

Ashish Alfred, who operates two restaurants in Maryland, implored customers to remove all delivery apps from their phones. "It's a predatory business," he said, noting that Uber, DoorDash and others had not been willing to negotiate lower rates with him even when sales fell. "They say we have a responsibility to make it sustainable, but this is not a service we request."

With a lot of money, mainstream app companies have come up with ways to pressure restaurant owners into signing contracts with them, including downloading menus without the consent of the restaurants and then offering their own delivery. Grubhub registered the Internet domain names of tens of thousands of independent restaurants. Legislators should restrict these anti-competitive practices.

Dan Raskin, owner of Manny's Deli in Chicago, said his biggest frustration was the unwillingness of companies to share customer information with him. That means you can't verify their claims that they are bringing you new customers. Worse yet, they seem to be using that data to create competitors. virtual restaurants - which do not have dining rooms, offer multiple kitchens from one location, and operate on apps only.