What third-party delivery marketplaces are doing, and not doing, for restaurants during pandemic
Source: Restaurant Hospitality
Last week, when Grubhub announced it was suspending some fees for independent restaurants in light of the coronavirus pandemic, the third-party marketplace was applauded. But the details the company provided were few, leaving industry leaders and operators frustrated and confused in an already scary and uncertain time.
For a while now, there has been a fair amount of skepticism from operators about the benefits of their third-party marketplace partnership. These marketplaces, like Grubhub Doordash, Uber Eats and Postmates, can charge as much as 30% commission fee to restaurants per order. States and cities have looked to cap fees in the past, and yesterday, the National Restaurant Association offered guidance for state associations, which included a cap or reduction of delivery fees.
None of the major third-party services have offered to waive or cap fees broadly, though. And the concessions these companies are making at this time ring hollow to some.
Operators and diners have questioned how these apps are promoting themselves to customers during this crisis.
"Grubhub's announcement that they will eliminate fees on 'qualified independent restaurants' is a positive step during this state of emergency, but their press release creates confusion during a very uncertain time," said Andrew Rigie, the executive director of the NYC Hospitality Alliance upon hearing Grubhub's announcement. But, as was later clarified, Grubhub is not actually eliminating fees, it's suspending collection of its marketing fee for independent restaurants who sign up for the service and who agree to work with the service for one year.
Here's a running list of how the major third-party marketplaces are adjusting their business relationships with restaurants in response to the coronavirus pandemic.
The company is offering an "emergency waiver" on fees charged to new restaurants that sign up for Postmates.
Eligible independent restaurants were able to sign up for a deferral of marketing fees on March 16 and can do so until the 29th. This date may be adjusted as the situation changes. Restaurants are required to sign up for Grubhub for one year to opt-in to this deferral.
This deferral is in regards to marketing commissions specifically, and the restaurant will still be responsible for paying delivery commissions.
After the deferral period has ended (which is currently set for March 29, but could change) the restaurant will resume paying their contracted commission rate, but will not be repaying deferred fees for a two-week period.
At the end of those two weeks, the restaurant will continue to pay its contracted marketing commission rate and start repayment on the deferred fees in four equal installments over a period of four weeks.
After those four weeks of repayment, the restaurant will return to paying their contracted marketing commission rate.
Restaurants have the option to receive daily payouts rather than waiting until the end of the week to see revenue from deliveries.
Uber Eats is the waiving delivery fee that customers pay for orders from independent restaurants and increasing its marketing efforts. For this purpose, Uber Eats is classifying independent restaurant as all non-franchise restaurants that are independent of a national chain.
No commission for 30 days for new independent restaurants in the U.S. that sign up for DoorDash now or through April. But existing DoorDash restaurants will pay no commission fees on pickup orders.
DoorDash will add more than 100,000 independent restaurant partners to DashPass, its subscription program which offers $0 delivery for consumers, for free. Restaurant partners with Caviar, a third-party marketplace owned by DoorDash, will be able to participate in a $0 delivery fee program.
DoorDash is earmarking up to $20 million in merchant marketing programs.