Restaurants and grocery shoppers have come to rely exclusively on food delivery apps during the coronavirus pandemic despite the growing chorus of critics who say these platforms charge egregious and predatory commission fees. But a new crop of competitors aims to do better for struggling restaurants and workers, offering reduced or eliminated fees and greater business autonomy to help alleviate the immense financial strain of this crisis.
“We worked night and day for four and half days straight to launch,” says Abhinav Kapur, CEO of the restaurant analytics company Bikky. Kapur and his team recently launched a new alternative to platforms like Seamless and Grubhub called Project Quarantine. The platform has about 2,500 restaurants participating, according to Kapur. Most are based in New York and Chicago, but the company is also looking to add more restaurants in Philadelphia and Washington, D.C. in the coming weeks.
Complaints about the big delivery platforms from restaurants aren’t exactly new, points out Kapur. “We’ve sort of been frenemies with food delivery since we started the company,” he explains. But now that restaurants are relying on delivery and pick-up orders for 100% of their revenue, the commission fees that once made for minor grumblings are now causing a veritable uproar from cash-strapped restaurant owners.
Kapur’s own family has experienced this firsthand. His inlaws operate a popular Indian restaurant located in midtown Manhattan called Amma but they recently made the difficult decision to close the restaurant entirely rather than pivot to delivery, in part because of those high commission fees.
Despite continued pleas for negotiation from restaurant owners, delivery platforms are reportedly refusing to budge. So Kapur and his team decided to create an alternative.
“If they’re not going to step up,” Kapur figured, “we need to step up and find a way to let consumers know that the best way to support these local businesses is to order directly from them.”
Bikky’s new platform does just that, making it easier for consumers to order directly from a restaurant’s own website rather than rely on a third-party delivery app. If the restaurant doesn’t offer online ordering, Bikky encourages consumers to call them directly in order to place an order by phone.
Ordering directly helps ensure that the restaurant makes more money off of your order, says Kapur, but consumers don’t have to be motivated by generosity alone. Ordering direct is a better deal for them too, he says. “The amount that you’re spending on meal delivery is anywhere from 25% to 30% cheaper…than ordering through third parties,” because so many major delivery platforms have to charge service fees on every order.
Restaurants can help encourage direct orders by offering perks to customers who reach out. “We have a 20-location burrito chain, and you get ten bucks off on your first order, and then free chips on every order after that,” says Kapur. Other Bikky clients offer a straight 10% discount for ordering directly. But whatever the incentive, just make sure it’s clear and easily accessible to consumers.
The transition to delivery has been a steep learning curve for many of Kapur’s clients. Unless they sell something that transports easily like pizza, most restaurant owners have to adapt their menus, often by selling pantry items and more foods that tend to travel and reheat well, as well as by thinking more carefully about delivery packaging. “The logistics are totally different, and the customer is totally different,” explains Kapur.
Restaurants that offer a family size meal on their menu seem to be doing a bit better than competitors, he also notes. For parents juggling work and distance learning these days, a straightforward order like that can look pretty appealing. “At the end of the day, you’re too tired to cook,” says Kapur. “You just order from a restaurant that says, hey, here’s a meal for four people.”
Upserve is another restaurant technology company that quickly developed a delivery platform for its clients. Ivan Lee, owner of Chicago-based Aloha Eats and a client of Upserve, says he was able to use the platform to create an online menu in less than 24 hours. “Using Upserve…has kept us afloat,” says Lee.
Yvette Leeper-Bueno, owner of Harlem-based Vinateria has also been pleased with Upserve’s new services. “As soon as we heard about the possibility of the dining ban in New York City, we decided to leverage it,” she explained. “I’m glad the infrastructure was there because now we’re using it exclusively,” she adds.
Nate Reilly, a co-owner of Three Magnets Brewing in Olympia, Washington, has also been happy with Upserve, especially over other platforms. “We had our online ordering up and ready on day one of the dining ban,” he says, “other delivery services want 30% off the top, which is garbage.”
Upserve is offering the service for free to restaurants for at least 12 months, according to the company, along with social media and online marketing tools to help drive web traffic to restaurant websites. Sheryl Hoskins, CEO of Upserve, says she’s “proud of how the…team quickly mobilized to provide free online ordering capability.”
In the grocery delivery space, Dumpling offers yet another alternative. Founded in 2019, Dumpling predates the coronavirus but its business model has become incredibly timely. The company began as a response to complaints from Instacart workers, complaints that have now only become more widespread. Dumpling raised $3 million in funding last year and attracted media attention by marketing itself as treating its shoppers more like solo entrepreneurs than gig workers.
One grocery shopper on Dumpling reports that while business was initially slow on the app, she’s now filled her days with grocery orders. She says what she appreciates most is the app’s flexibility, which allows her to shop at a wider range of grocery stores and offers greater autonomy over marketing and fees, all of which she sets for herself.
“I took a leap of faith to try and see what my next step might be,” she says of her recent decision to eliminate delivery fees. It’s helped get her more clients quickly but also helps grocery buyers who are suffering financially. But some Dumpling shoppers are keeping fees the same or even raising them, she says, and that’s part of Dumpling’s appeal. They get to make those decisions for themselves.
Meanwhile, the bigger food delivery platforms are now starting to offer a bit more to restaurants and delivery drivers. UberEats, for example, has started a Restaurant Employee Relief Fund that offers $500 grants to eligible restaurant workers, including delivery drivers on the UberEats app. New York City consumers can donate to the fund via the app, an effort that may soon expand to other cities. Grubhub has also sweetened its Supper for Support program by offering $250 as an incentive to each participating restaurant.
Despite those changes, platform commission fees remain largely stagnant, a continued source of frustration for restaurant owners who say the high fees are making their economic situation even more precarious. Now, however, with new platforms like Bikky and Upserve stepping up as competitors, there are alternatives.