Pizza Inn and Pie Five are leaving Uber Eats.
Rave Restaurant Group, the owner of the two pizza franchises, said it is cutting ties with the third-party delivery service after it moved to raise Rave’s commissions by 3%.
Rave CEO Brandon Solano said the price increase would have given operators little to no profit on Uber Eats orders, and that the delivery company was not willing to negotiate on a better rate.
“At some point, enough's enough,” Solano said. “I just can't raise my prices anymore. I can't take it in margin anymore. And I'm just not going to participate in this.”
Uber Eats last week raised delivery rates for many restaurants, its first hike in about 10 years. For restaurants enrolled in the service’s Basic tier, fees increased 5%, while those in the Plus tier will have to pay an additional 5% on orders from Uber One subscribers, who make up a majority of Uber’s delivery business. Fees for restaurants with a custom rate rose 3%.
Asked for comment Tuesday, Uber Eats referred back to last week’s statement: “This change reflects higher costs to operate a reliable delivery marketplace and helps ensure we can continue supporting restaurants, couriers, and customers,” the company said.
At Dallas-based Rave, the Uber Eats app was its second-largest third-party delivery channel. Solano acknowledged that dropping the service was not easy because it will mean lost sales.
He is hoping to recoup some of that business through other channels, and said that Rave is in negotiations with DoorDash on an exclusive contract.
Restaurants have long been frustrated by the price of third-party delivery. According to a survey by Restaurant Business and Nation’s Restaurant News, 50% of operators said third-party fees are the biggest obstacle to growing their off-premise business.
These costs can be even more onerous for smaller restaurant groups and independents, which don’t have the scale to negotiate better rates.
At the same time, delivery has become an increasingly important revenue source for many restaurants as customers become accustomed to the convenience.
That’s why Solano was expecting some pushback from franchisees when he brought up the idea of leaving Uber Eats. But to his surprise, operators were on board.
“There wasn't a single franchisee that thought we were doing the wrong thing,” he said.
Pizza Inn is a buffet concept with 97 U.S. locations, while Pie Five is a fast casual with 16 locations.
CORRECTION: A previous version of this story said fees in Uber Eats' Plus tier rose 5%. That increase applied only to orders from Uber One members. The story has been updated.
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