With Delivery Apps, the Balance Scale Is Severely Tipped Against Restaurants

This is Eater Voices, where chefs, restaurateurs, writers, and industry insiders share their perspectives about the food world, tackling a range of topics through the lens of personal experience.

I feel like a yo-yo these days. Up until last spring, I was the chef and owner of EL Ideas, a Michelin-starred restaurant in Chicago. Once we couldn’t do that anymore, I served upscale curbside takeout for a few months. Then, when it seemed safe enough to go back indoors in the summer, we put away the to-go containers and welcomed back guests. But once autumn rolled around, we were again forced curbside like everyone’s raked leaves. This time, my wife and I decided to launch a barbecue joint called Boxcar BBQ (cheap plug: You gotta try the bone-in beef rib!).

So now winter’s here in full force and it’s apparently okay to dine inside again. Well, I, for one, am not ready to trade in my pit gear for fancy chef pants just yet.

In any case, the pandemic has brought a crisis in our industry to the surface, and not even the return of indoor dining can push it down for very long. The restaurant industry has been cannibalizing itself by joining delivery services like Grubhub, DoorDash, and UberEats.

As a consumer, I get it. The convenience and the wide selection of restaurants makes takeout in recent years as good as it’s ever been. And as someone who used the apps a lot (pre-pandemic), ordering delicious food from the sofa speaks powerfully to the lazy side of my heart.

The allure as a restaurant owner is obvious: Our goal is to get our succulent barbecue in front of people. And if the customer’s goal is to get dinner on the table as quickly as possible, the best way to do that is to open an app and have it delivered. So it’s on restaurants to try to make that happen.

Well, we tried. But here’s the thing: Delivery apps are destroying restaurants, from mom-and-pop places to chefs with Michelin stars. They’re a terrible deal.

The best analogy I can think of is the bizarre relationship between ants and cordyceps.

Cordyceps, a type of fungus, is known to bind itself to innocent ants who venture from their nests. Little by little, the fungus turns the ant into a zombie, hijacking the insect’s brain. Eventually, the fungus takes over to grow a spore sack, and when it’s big enough, the sack bursts and rains spores all over the ground. The ant’s buddies, who can’t help but go about their daily quest for sustenance, step all over the spores and the horrific and mystifying cycle begins anew. (Check it out on YouTube; it’s wild.)

Like the ants who can’t help stepping all over the cordycep spores as they go about getting their daily grub, it goes against a restaurant’s instincts to say no to delivery services. Unfortunately, teaming with a major third-party delivery service not only poses financial dilemmas for the business, but also presents weird ethical issues on a personal level.

Chicago recently passed a resolution to temporarily cap delivery app fees at 15 percent, but this is little more than a conciliatory gesture and effectively does nothing to ease the burden on restaurants. Let’s do some math.

We’ll start with a $30 check for some smoked ribs, sides, and an appetizer or dessert. Even with a 15 percent commission, the delivery apps take $4.50 off the top. Industry standards for food and labor costs come in around 60 percent, so let’s back out another $18, leaving a remainder of $7.50 to eke out a profit.

Sounds good so far, right? But here’s where the real dilemma begins. Industry standards for occupancy costs such as rent, utilities, waste removal, and the like are around 20 percent in most successful places. Anything higher than 30 percent and an eatery is in serious trouble.

Unfortunately, without butts in seats and highly profitable alcohol sales, most of us are still paying 2019 rents while bringing in revenues so low they look like they’re from the 1960s. Whereas labor and food costs would presumably go down with a lack of business, leases stay pretty much the same, meaning once-stable business models are now scraping the bottom of the barrel just to get by. It would be shocking if there were more than a handful of places with occupancy costs that were less than 50 to 60 percent of total revenue through 2020. And that can even increase for a large restaurant located in the center of town.

Not that we’ve been anywhere close to this benchmark during the pandemic, but for argument’s sake, let’s say we come in at 20 percent occupancy costs. Throw in the 15 percent commission, plus 60 percent for labor and food, and that leaves us at 95 percent cost for the sale. I just made $1.50 on a $30 sale.

The delivery apps, on the other hand — without any of the stress, culinary acumen, or physical effort — will have grossed $4.50. If customers properly tipped the driver, they likely saw more money from this sale than we did. Within this stark reality lies the weird ethical dilemma: While our barbecue is literally and figuratively putting food on the table for so many families, my own is left to survive on mere table scraps.

Sure, the old adage goes, “The only thing that’s really fair in life is that life isn’t fair.” But this feels like bullying — there’s a difference between unfair and unjust.

Delivery apps have their place within the industry and provide great services, and they should be fairly compensated. But that’s not what’s happening. The cordycep spores, not having the long vision to understand what it will mean to their own future, are capable of wiping out an entire ant colony. I hope it doesn’t come to that for us.

Even when “normalcy” returns, this conundrum isn’t going anywhere at all. I’ll spare you the math this time, but once the city’s 15 percent cap on delivery fees comes to an end, fees in Chicago and elsewhere will return to the even more absurd pre-pandemic rates of upward of 30 percent.

At some point, we have to realize there’s nobody to blame but ourselves for this mess. Nobody forced restaurants to sign up, so why should they change for us? To make matters worse, DoorDash, Grubhub, and Uber are already publicly traded behemoths worth over $170 billion (that’s larger than the combined sum of Chipotle, Wendy’s, Domino’s, Dunkin’ Brands, and Yum Brands (KFC, Pizza Hut, Taco Bell).

What’s really telling, however, is that Wall Street feels that post-COVID consumers will still be ordering food from their living rooms while watching Netflix. So much for the redux of the roaring ’20s I’ve been hearing so much about!

Lucy Hewett/Eater

I ask the general public to take action by supporting restaurants that are just saying no to delivery app services. The connection with the eatery will be more intimate, and you will feel good for supporting hard-working people through difficult times. But I don’t believe this will be enough. Most of the public wants what it wants when it wants it, and asking a consumer to give up a quality-of-life attraction like having food from their favorite restaurant delivered to their door is like asking a kid to give you back candy they’ve already put in their mouth.

The only way these companies will listen is if we stop lining their wallets with our money and efforts. So Boxcar has refused to get on board. Instead, we’re relying on the benevolence of customer-paid delivery services (like Getcho and Uber Package, which differs from Uber Eats) to get our barbecue to your door. These entities don’t take any commission from us and have proved very efficient for our customers. I encourage other restaurant owners to stand tall and proud by shunning the apps and removing their establishments’ offerings from their servers as well.

Unfortunately, like the poor, hard-working ant colony, the balance scale is severely tipped against restaurants. So it’s on us to either accept our new zombie-like reality or stand together to make a change. Neither way is easy, but I believe the latter is much easier to digest.

Phillip Foss is chef and co-owner of EL Ideas and Boxcar Barbecue, and co-author of the graphic novel Life in EL.