Since stay-at-home orders were activated throughout the pandemic, delivery services such as Waitr, DoorDash and Grubhub have skyrocketed in usage. However, certain delivery apps ask for as much as 30 percent out of a business’ profit, which could potentially be harmful to small restaurants.
In May 2020, Waitr reported a net loss of $2.1 million, a significantly lower drop than the $24.7 million loss reported in 2019. Similarly, Grubhub reported a 12% year-over-year increase in revenue. According to Grubhub, all of its partner restaurants are subject to a 4% processing/fraud protection fee, a marketing fee of 15-20%, and an optional delivery service fee, at 10%. Most delivery apps ask for between 15% and 30% of each order sent to an establishment.
While some restaurants find that the benefits from delivery apps are worth the fees, the cost is the very thing that drove Judice Inn co-owner, Gerald Judice, away from Waitr.
“When we originally started with Waitr, we had a very positive experience. But once they were bought out, and their whole structure was changed, they were charging both sides, I felt, way too much. So, we decided to quit that service,” Judice said.
Judice now uses ChowNow, a delivery service that customizes an app for each of their partner restaurants, so a business is not listed among its competition. Rather than taking a percentage out of an establishment’s profit, ChowNow offers plans that can be paid monthly or annually.
ChowNow does not raise the prices of a restaurant’s menu items, though the price does increase according to the distance of the delivery.
“The customer could choose the delivery option, and the only fee they pay is the delivery fee. My food prices are the same. They just pay for the delivery, which I think is how it should work in the first place,” Judice said.
Monica Minczeski, the owner of Jammin’ Java, finds her experience with Waitr to be a highly positive one.
“It’s a way of marketing,” Minczeski said. “A lot of people in the area didn’t know who we were. Someone in Carencro can try our food even if they don’t want to drive all the way to the southside of Lafayette.”
Minczeski sees delivery apps as marketing services as much as delivery services. “Like anything else, you have to pay for marketing. Either someone in your community does it, or Waitr does it.”
Advertising a business on a billboard in Acadiana can price from $20-$100 per day, as opposed to the 15-30% loss of revenue from a delivery app, or $149 monthly plan from ChowNow.
Once their businesses begin to recover from the financial strains caused by the pandemic, Minczeski and Judice plan on continuing the use of their delivery apps.
“I like ChowNow. I think it’s more convenient for the customer to be able to see their order,” Judice said. “They designed an app specifically for me. It wasn’t just a list of restaurants to choose from. We have our own Judice Inn app through them.”
“Don’t be afraid to order on Waitr. The restaurants are offering it to you because they want you to order. I have a small little cafe and I want people to order,” Minczeski said.
Dean Turcol, Media Relations Director at Waitr, declined to comment on any financial-related issues for this article.