How Yelp/Grubhub screws restaurants
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Related: Delivery can't sustain restaurants.
Derek Thompson: One month ago, you said that you thought 50 percent of America’s restaurants would not reopen. Are you now more or less optimistic about the future of restaurants than you were a month ago?
Tom Colicchio: Less optimistic. The James Beard Foundation did a survey of restaurants, and only 20 percent of them said they’d definitely remain open through the shutdown. Even if they get their restaurants open, they might immediately lose half of their seating to social distancing. Most restaurants can’t get by with that.
The question isn’t when we open up. The question is: When will the public feel safe to go to restaurants? If the disease is still around, people won’t feel safe. And if they return to restaurants, and the bartenders and waiters are wearing masks? I don’t think people are going to feel safe.The boom times of the last few years are over. That reality just shifted in a major way. We’re looking at a major recession, and maybe a depression. So who’s going to go out there and spend right now? Restaurants are going to have to change.
Thompson: How do you see restaurants trying to adapt?
Colicchio: Restaurants will have to cobble together a business of delivery and community-supported agriculture. They’ll sell proteins and vegetables and fish and cheese. They’ll use their supply chain to act as a grocery store.
But in my case, for at least two of my restaurants, most of the business comes through private parties and conferences. For the foreseeable future, that’s gone. I don’t know how to make up the income. The only way to sustain yourself is to get major concessions on rent and shrink the staff. And, by the way, both of those things could make the recovery slower...
Thompson: There are so many different kinds of restaurants, from fast food to fast casual, like Chipotle, to fine-dining establishments. Who is surviving the pandemic?
Colicchio: The fast-food restaurants and drive-throughs are doing quite well. Some restaurants that do takeout are doing well too, but a lot of them will have to close because the delivery business is going to get spread out very quickly. From what I’ve seen and heard, some of the higher-end restaurants seem to be doing better than the lower-priced neighborhood places when it comes to takeout.
Thompson: That makes sense to me. I’m cooking five or six nights a week and doing takeout on weekends. But because takeout is the special occasion, I tend to order from the sort of restaurants where I’d be excited to dine out in a normal economy. So, without meaning to punish smaller neighborhood places, I’m implicitly setting the threshold for dining “out” pretty high.
But I wonder: Is this shift to delivery really sustainable? I’ve spoken with some restaurateurs who say they depend on booze and dessert to maintain their profit margins, and nobody orders booze and dessert to go.
Colicchio: I think the bigger problem is that delivery services are charging 30 percent fees [for processing, delivery, and commissions]. That’s just not sustainable for most restaurants. The most I can afford to pay is about 11 percent for delivery services, based on my payroll for front-of-house staff. With delivery, I still have to pay rent and overhead and the kitchen. What I’m cutting out is front-of-house. Eleven percent is all I can afford.
In New York City, there’s a bill where they want delivery charges capped at 10 percent [of the total purchase price of an order]. That would work. It would also push more people to call the restaurants directly.
If I were going to do my own delivery—if I were to bring delivery services in-house, where my own waitstaff delivers the food—I would probably limit deliveries to a certain radius around the restaurant. But the customer would pay for that service. Right now, the customer is getting the benefit of the delivery, but the restaurants are paying for it, and many of them can’t afford it.
"Now look here, you Baltic gas passer... " - Mik, 6/14/08
The saying, "Lite is just one damn thing after another," is a gross understatement. The damn things overlap.
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I used Doordash a lot the last couple years, but since I found how they were screwing their drivers by keeping the tips you post online I pretty much quit. They say they are not doing that anymore, but I figure if they would do that to begin with, what other shady practices do they have?
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@George-K said in How Yelp/Grubhub screws restaurants:
Related: [Delivery can't sustain restaurants.]
Shocking. I am surprised that the vocal minority of people bragging about how much they'd definitely support their local restaurants by ordering delivery and takeout through the pandemic, are not in fact doing enough to support that industry.
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@Horace said in How Yelp/Grubhub screws restaurants:
@George-K said in How Yelp/Grubhub screws restaurants:
Related: [Delivery can't sustain restaurants.]
Shocking. I am surprised that the vocal minority of people bragging about how much they'd definitely support their local restaurants by ordering delivery and takeout through the pandemic, are not in fact doing enough to support that industry.
Shocking for sure that a business can’t compete with overwhelming messaging that it is not safe to go outside nor be near people. People go to restaurants for the experience. Scale matters.
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Before the pandemic, U.S. consumers purchased about a third of their calories and spent over half of their food dollars on food consumed outside of their home – restaurants, fast food, schools, work cafeterias, etc.,” explained Dr. Douglas Jackson-Smith, a professor at the School of Environment and Natural Resources at Ohio State University. “The closure of these outlets and stay-at-home orders have radically changed where most Americans buy and consume their food, and the supply chains have been slow to reorganize and respond.”
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Yelp saw the BBB shakedown model---figured out how to make it even more corrupt and shady, and ran with it.
I don't really know anything about Grubhub, specifically, but as a general rule have major problems with the whole 'gig' economy businesses. Large companies--(uber, doordash, etc) have what in reality are employees.
Under the guise of 'being their own boss', they sucker the drivers into accepting all kinds of liability, for the prospect of making up to $20 an hour... La-de-freaking-dah. In the meantime, by the time the person has paid all the true expenses of running their own business (insurances, car maintenance, etc) many are lucky to be breaking even.
I know some people are able to make it work (I recall Lufin describing something that made sense) but as a whole...not so much.
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@Loki said in How Yelp/Grubhub screws restaurants:
I assume the restaurants are well aware of the costs and are okay with it. If so what am I missing?
The impression I got is that restaurants were not, in fact, aware of the costs when the phone number was switched.
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@George-K said in How Yelp/Grubhub screws restaurants:
@Loki said in How Yelp/Grubhub screws restaurants:
I assume the restaurants are well aware of the costs and are okay with it. If so what am I missing?
The impression I got is that restaurants were not, in fact, aware of the costs when the phone number was switched.
It seems unclear to me based on their words... like you need the marketing agreement to get listed and that’s one fee and then there is a delivery fee. So the question is once you search and get the restaurant through grub hub marketing how do you get subsequent orders for just the delivery fee?
Grubhub offers a “marketing” service to restaurants, which includes being listed on the Grubhub platform, for between 15 percent and 20 percent of each order total. It also offers a physical delivery service, which costs restaurants another 10 percent. Grubhub says it provides phone numbers for restaurants that sign up for marketing but not delivery in order to capture all orders that could be eligible for its fees.
“It is our understanding that Grubhub has marketing agreements with some restaurants that allow Grubhub to utilize referral numbers on third party partner sites like Yelp,” a spokesperson for Yelp said in an email. She deferred further questions to Grubhub.“
