Local restaurants facing high costs using food delivery apps
CHATTANOOGA, Tenn. (WDEF) – Throughout the pandemic, there’s been a lot of talk about food delivery services such as GrubHub, Delivery Dudes or Uber Eats.
With lockdowns and stay at home orders, conventional wisdom says that many Americans have been ordering takeout and getting groceries delivered.
However, a new study by Invisbly.com says that this actually isn’t the case.
In addition, local restaurants like Charlie’s BBQ and Bakery are saying that the apps have been expensive, with owner Elizabeth St. Clair calling it a necessary evil.
“It’s kind of a necessary evil right now, especially for small places like us. The good is that we get our product in front of people that we may have never gotten our product in front of that live across town and don’t want to drive through town fifteen minutes. The bad and ugly are the fees,” says St. Clair.
She says that some apps charge restaurants as much as 30 percent.
“In order to at least break even on these services, small independent businesses are having to raise their prices to cover the fees of the restaurants which are typically anywhere from 20 to 30 percent and usually around 30 percent,” St. Clair explains.
Don Vaughn, the head of product at Invisbly, says that these high costs might have to do with the expenses that these apps put into their delivery services, and the evident lack of customers.
“Unless you’re at Amazon scale it’s going to cost you several dollars to have people custom picking up an order and delivering it to people with, often groceries are food that have an expiration date on them. So this is not something that’s – there are transaction costs. And so that’s what we’re finding – summary is that most Americans are not doing this,” says Vaughn.
Vaughn says that when you break down the demographics of the study, you start to see some trends depending on your age and income bracket.
“In our real time research polling, what we found is that there’s a really clear relationship about whether people ordered delivery and what their age group is, where 18 to 24 year olds 59 percent of people are getting delivery at where you look at 55 plus it’s down to 41 percent so there’s this real clear change,” he says.