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In recent years, restaurants in New York City have complained about the fees charged by third-party ordering and delivery platforms, such as Grubhub and DoorDash. These problems only increased during the pandemic, when eateries became more dependent on meals to boost their financial survival.
Now restaurants are increasingly finding a way to avoid the problem by avoiding the platforms and taking ownership of the process themselves. And they say the benefits go beyond the potential savings on third-party fees.
“It’s a direct communication with our customers,” said Jon Sherman, CEO of Sticky’s Finger Joint, a chain of centered chicken with various branches in the city.
Indeed, a burgeoning industry has emerged from technology-oriented businesses that help restaurants create, manage and market their own online ordering platforms and connect them with delivery staff. Some of the businesses are based in the city, including Lunchbox, which they say has had 700% growth in its business over the past year, and Traiilo, a company that focuses on restaurants in Latinx and other food and beverage vendors. .
Another major venture in New York is BentoBox, which is perhaps best known for helping restaurants develop their websites, but can also help with ordering platforms.
| Ticker | Safety | Last | Alter | Alter% |
|---|---|---|---|---|
| GRUB | GRUBHUB INC | 65.51 | +0.21 | + 0.32% |
| DASH | DOORDASH INC. | 140.50 | +12.36 | + 9.65% |
FOOD SUPPLY INVESTORS ARE OVER
Most of these companies charge monthly for their work instead of charging fees for each order, as third parties usually do. According to Lunchbox, the monthly cost can vary, but according to Nabeel Alamgir, CEO of the company, it is $ 300. Although it is still a hit for restaurants, Mr. Alamgir said third-party fees could exceed the amount by as little as eight orders per month.
In the pre-pandemic period, third-party restaurant fees can often amount to as much as 30% per order, according to the restaurant industry. (The companies can also charge separate fees to customers.) The New York City Council last year passed legislation that temporarily limits fees to restaurants to 20% – 15% for delivery, 5% for other charges – as a way to restaurants during the health crisis. Although eateries can now welcome customers inside and out, they must have a capacity limit of 50% from the state, and many say they are still heavily dependent on delivery.
Restaurants are concerned about what will happen after the legislation is up, as the fee restrictions will no longer apply at a certain point in time after the institutions are allowed to operate fully. City Councilman Mark Gjonaj, a Democrat who represents parts of the Bronx and helped push for the cap, said he is looking at permanent legislation as he believes the surge in delivery via third-party platforms is here to stay.
“It has become natural to order your food online,” he said. Gjonaj said.
In recent years, restaurants in New York City have complained about the fees charged by third-party ordering and delivery platforms, such as Grubhub and DoorDash. This concern only increased during the pandemic. ((Jeenah Moon / Bloomberg via Getty Images))
DOORDASH MANAGER GENDER SEX OF CUSTOMER, THREATENS TO CANCEL ORDER
The third-party businesses justify their fees by saying that they offer a powerful marketing platform that connects restaurants with many customers. In addition, the businesses can manage the delivery of food. Grubhub, for example, points to its network of 30 million meals and says its users placed $ 9 billion in orders on its platform last year.
“Grubhub supports restaurants so that they can be more successful,” Kevin Kearns, senior vice president of Grubhub, said in a statement.
Third-party companies also say that government pricing regulations, such as the cap in New York, could force them to raise consumer fees as a way to make up for lost revenue from restaurants. In turn, they say this could lead to customers ordering less frequently at restaurants, which will have an impact on what the eateries earn.
The third-party companies also note that their fees are adjustable based on the promotion level and the outreach that a eatery is looking for via the platform.
Restaurants have problems with the platforms outside the fees, and therefore many prefer to also take responsibility for their ordering operations. Restaurants note that they can not connect directly with customers if eaters go through third parties, whether it is to promote a future offer or correct a mistake with a previous order.
In the pre-pandemic period, third-party restaurant fees can often amount to as much as 30% per order, according to the restaurant industry.
This is important for Shai Sudai, managing partner of Nish Nush, a Mediterranean restaurant with two locations in Manhattan.
“If the customer has a problem, I can treat him personally and make sure it is not going to happen again,” he said. Sudai, which has developed its own ordering platform, said.
The third-party companies say they are trying to give restaurant options off their platforms. DoorDash says it can help a restaurant set up its own ordering system if it chooses, even if it’s for a fee. Grubhub also has such services available.
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As much as some restaurants say that they are trying to bring ordering operations internally, they are saying that they should also stay on the third party platforms as the platforms are so visible and marketable. In addition, restaurants acknowledge that many of their customers are accustomed to ordering through third parties.
“Many customers are loyal to their platforms,” he said. Sherman of Sticky’s Finger Joint said.