Pizza Business Owner Shares Harsh Reality Behind Food Delivery Apps

During the COVID-19 pandemic, many stores without an internal delivery service have turned to apps including Grubhub, DoorDash, Postmates or UberEats, providing them access to an online store and a vast network of drivers, but at what cost?

Giuseppe Badalamenti, a consultant and owner of small business Chicago Pizza Boss, published a picture he claimed was of a Grubhub invoice earlier this week that appeared to show just that, indicating one restaurant made under $400 from orders totaling $1,000, underscoring the high fees charged by delivery apps and revealing the harsh reality for restaurants.

The image featured an order summary for March, indicating the app took hundreds of dollars in commission, fees and promotional costs from the unnamed outlet.

He wrote: "Stop believing you are supporting your community by ordering from a 3rd party delivery company Out of almost $1,100 of orders. Your restaurant you are trying to support receives not even $400. It is almost enough to pay for the food."

Seven orders were adjusted indicating the real order total was closer to $900, and it was not immediately clear if the promotions were in place by the app or restaurant.

Regardless, Badalamenti, who said the invoice was obtained from one of his clients, used the image to campaign for a fairer system to be used by the delivery apps.

"The small guys don't have negotiating power and the leverage the big guys do but do not want to be forgotten about," he elaborated in a comment under his post.

"These companies make your customers their customers. It is predatory to a degree. They suggest other foods and other restaurants," he added.

Complaints about high fees on delivery apps are not new, but the post proved alarming enough to attract hundreds of comments and around 2,000 shares on Facebook.

😉 Stop believing you are supporting your community by ordering from a 3rd party delivery companyOut of almost $1,100...

Posted by Giuseppe Badalamenti on Wednesday, April 29, 2020

"This is where someone finally had the balls to allow some else to post their invoice to say enough is enough. There have been rumblings for 3 years... this is the tipping point," he claimed. Grubhub has been contacted for comment by Newsweek.

According to The Guardian, Grubhub is one of a handful of firms enjoying a spike in use during the novel coronavirus pandemic that has shuttered brick-and-mortar businesses across the country. The delivery app has reportedly received up to 15 times the usual number of memberships.

The newspaper reported UberEats has, for now, stopped taking activation fees for new restaurants, but commission costs have not been changed. In a March notice, Grubhub CEO Matt Maloney said commission fees would be deferred, but not canceled.

"With dine-in down as much as 75%, local restaurants need our support more than ever. It is Grubhub's responsibility to step up during this difficult time. So, we are deferring commission fees for impacted independent restaurants," he wrote.

Grubhub was one of four delivery companies named in a filing in a Manhattan federal court earlier this month, Reuters reported.

According to the lawsuit, the collective was accused of exploiting dominant positions in the industry and charging fees that ultimately impact the cost of food on the menu for customers. The class action lawsuit alleged they violated U.S. antitrust law.

Grubhub faced criticism for a "Supper for Support"promotion that offered discounts for customers but made restaurants cover the cost while paying a processing fee.

"We're committed to helping restaurants, drivers, and diners through this challenging time and investing in programs that directly drive more business to our restaurant partners," a Grubhub spokesperson told Business Insider last month.

"There was some initial confusion about Supper for Support, an entirely optional initiative to drive more business to restaurants, and we made changes to the promotion more than a week ago to fund $30 million, $250 per restaurant, that we expect will stimulate $100M in food sales for restaurants," the company added.

An UberEats blog post mid-March confirmed delivery fees were being waived and it was launching "daily dedicated, targeted marketing campaigns" for users. Doordash said last month it was cutting commission fees by 50 percent for orders until the end of May. DoorDash, Postmates and UberEats have been contacted for further comment.

Grubhub
A Grubhub tablet displays orders ready for pick up at Claro on April 25, 2020 in Brooklyn. Gary He/Getty
Pizza Business Owner Shares Harsh Reality Behind Food Delivery Apps | News