Pandemic puts tensions between restaurants and third-party delivery in crosshairs

At a time when restaurants need delivery most, their relationship with delivery providers is becoming increasingly fraught.
Photograph courtesy of Grubhub

Restaurant operators have long had a fraught relationship with third-party delivery providers, wrestling over commission fees and access to customer data, among other issues.

But as the country’s restaurant operations are forced to shift to off-premise-only mode to slow the spread of the coronavirus, the fissures between restaurants and third-party delivery companies are becoming even more pronounced.

“I think the entire food delivery space needs to be a government-regulated industry,” David Chang, founder of Momofuku Restaurant Group, tweeted early Monday. Momofuku shuttered all of its restaurants in mid-March, as the virus began to spread around the U.S., and launched a relief fund for its employees.

Last week, Shake Shack announced it was ending its exclusive Grubhub partnership to expand its delivery platforms to include Postmates, DoorDash, Caviar and Uber Eats, a move that may hint at the future of such “exclusive” agreements once the pandemic crisis has passed.

Grubhub drew the ire of operators last month after it was forced to clarify an aid offering to restaurants, laying out a repayment plan for commissions deferred during the crisis. Many had believed commission payments would be suspended rather than deferred.

“It’s like a bait and switch,” Scott Weiner, co-owner of Chicago-based Fifty/50 Restaurant Group, said at the time. “All of a sudden, these guys are heroes.”

And it has since received complaints over its “Supper for Support” promotion after a copy of the restaurant-facing agreement to participate in the campaign circulated on Twitter late last month. By participating, restaurants agree to take on the cost of the discount, with Grubhub continuing to charge its commission on the full price of orders. After facing criticism, Grubhub has said it would begin giving up to $250 to each restaurant participating in the program, according to media reports.

Their margins even tighter than normal, a number of small operators have decided to forgo third-party delivery entirely in favor of self-delivery or pickup-only operations.

Jeremy Lieb, owner of Cincinnati’s Sacred Beast, laid off his 42 employees and pivoted to a market format amid the crisis. Online orders at his business are available for window or curbside pickup.

“We’re not using Uber and Doordash,” Lieb said. “They just cost too much money. I called and asked if they would lower it. And I said, ‘I’m not going to use you.’”

Even some consumers are becoming aware of the commissions charged by third-party delivery services and are opting to contact restaurants directly to place their orders.

“The simplest way to insure that restaurants are getting as much money as they can, at a time when they desperately need all they can get, is to eliminate the middleman entirely,” food writer Helen Rosner wrote in The New Yorker last week. “Don’t use DoorDash or Caviar or Postmates or Uber Eats or Grubhub or Seamless or Delivery.com or Waitr: just pick up the phone and call the restaurants directly.”

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