Third-party restaurant delivery apps such as Uber Eats, GrubHub and DoorDash are in the crosshairs of two Connecticut chambers of commerce, which launched an initiative to discourage using them.
“Order Direct and Pick It Up” was initiated by the Westport-Weston Chamber of Commerce in the last few weeks. The Central Connecticut Chambers of Commerce, which represents businesses in Farmington, Bristol, Burlington, Wolcott, Plainville and Plymouth, liked the idea and ran with it, too.
Matthew Mendell of the Westport-Weston chamber said he started the initiative after several local restaurants complained to him. “The fees the third parties were charging were taking all their profits away,” Mendell said.
“The national apps take 30% for an order. That’s not an acceptable number. Even if someone orders through the app and picks up, it’s 25% just for taking the order,” Mendell said. “If you call the restaurant directly or go to its website, that’s the best way to accomplish the order without gutting them.”
Since the pandemic began, demand for food delivery and takeout has skyrocketed. For many, the convenience of the apps is irresistible. But restaurants nationwide have reported that fees charged by apps cut their already-single-digit profit margin down to almost nothing.
Cindy Bombard, president and CEO of the Central chamber, said she implemented a campaign supporting Mendell’s idea in her area to keep dollars in the community.
“We all want to support local communities, especially restaurants since COVID hit. If you order food and pick it up, or order through their own delivery system, the money stays with them,” Bombard said. “Third-party apps are now a middleman. That money is not staying local to the restaurant owner.”
Bob O’Mahoney, who owns Viva Zapata Mexican restaurant in Westport, said he doesn’t believe the public is fully aware of what the national third-party apps cost restaurants.
“They think they are helping a restaurant. And they are, in a way. But they are not thinking that 30% comes off the top,” he said. “On the one hand you need the delivery service to be competitive. But at the same time they’re taking the bottom line out from under you.”
O’Mahoney is working with the Westport-Weston chamber on the initiative, to educate the public.
“We need to create an awareness. It’s wonderful you’re supporting local restaurants. But if you can take it a step further and call us to order and pick it up yourself,” he said. “Most restaurants offer contactless pickup or you can call when you arrive.”
Some U.S. cities have taken other solutions to help restaurants protect their profits. In early 2021, Jersey City, San Francisco, Seattle and Baltimore and the state of Massachusetts capped third-party delivery fees at 15%. Other cities are considering capping fees, at least until the health crisis ends.
Connecticut has not done that. The only piece of legislation on third-party apps enacted in this state mandated that apps get written permission from a restaurant before posting its menu on its website.
O’Mahoney, in opposing the apps, said he is thinking about less fortunate restaurateurs. He said the customer base at his 53-year-old eatery is loyal and he is not hurting as much as other places are.
“Are we in danger of going out of business? No. But that 30% would help, absolutely,” he said. “I know other restaurants where that 30% can make or break them.”
Yvette Tavares of Connecticut Restaurant Association said CRA’s position on third-party apps is neutral. However, Tavares added that “for some restaurants it’s the right choice.
“These third-party apps are a powerful marketing platform. For a lot of restaurants, the frustration at the fees is high. At the same time they need to be on those platforms where the public is,” she said. “If they’re not on there and their competitor is, that’s not good for them. Being on there makes sense.”
Joe Sweeney, owner of Pomona Pete’s in Unionville, doesn’t like the apps because they take so much of his profit. But he uses them anyway. He said using them is “a double-edged sword.”
“You have to use them. You don’t have a choice. The mentality of the younger generation is, they’re hungry, right away they reach for their phone. How do you compete with that? It’s the world we live in,” Sweeney said. “Also, they’re thinking, I don’t mind paying someone a couple of bucks to drive my food out here when it’s 5 degrees out.”
Tavares added that some restaurants don’t want to add delivery to their service. “It’s not easy to add delivery. You have to have a certain kind of insurance. You have to have a staff person who will use their car. It adds a whole other element of managing the business,” she said. “They decide to outsource that.”
Phil Chabot, owner of North House in Avon and 1850 House in Southbury, has never used the nationwide third-party apps. “The fees are too high. I can understand it’s a necessary evil for some restaurants, but we’ve never used them,” he said. “A few customers have complained, but it’s not economically feasible for us. Luckily we have a good customer base.”
He uses Dine in CT, a Farmington-based delivery service. Chabot said he prefers that company because it is locally based, the drivers know the area, the fees are lower and Dine In handles all the marketing and credit-card processing. “When we get an order from them, we get 80% of the sale,” he said.
Tavares said that local third-party delivery services, such as Eat in CT and Eatzy — which runs Shoreline Menus, Nosh Haven and Greater Hartford Menus — show that using the Connecticut-based apps actually is promoting a local business.
“Connecticut residents run and operate these delivery services. They are very big on customer service. Some of the complaints we hear about the big guys is that if something goes wrong they are not as quick to resolve issues,” she said. “Small local companies tend to have better service. They can correct any errors that go wrong. They tend to have lower rates and better service.”
Andy Knutson, general manager of Naples Pizza in Farmington, doesn’t like the national delivery apps but he likes his affiliation with Eatzy. His complaint with the national apps is both the fees and the service.
“As a business, you have expectations of how the product is going to be received by a customer. The third party services are not part of that culture,” he said. “It takes things out of your control a bit. We weren’t happy with that at all.”
He ditched the big guys a few months ago and invested in Eatzy. So far so good, he said.
“Their percentage from us is 15%. And we are allowed to adjust our prices through them. When you order through them the prices are a little inflated and that makes up for our losses,” he said.
Susan Dunne can be reached at email@example.com.