With the advent of COVID-19 restrictions on restaurants, owners had the option of either closing or using delivery services.  Uber Eats, DoorDash, Post Mates and Grubhub expanded and posted twice the number of deliveries in April 2020 compared to the corresponding month in 2019.

Restaurants have however learned that the 15 to 30 percent commission fee eliminates margins and is decidedly unprofitable.  From the perspective of the major delivery companies, added businesses is not contributing to the bottom line.  Grubhub reported a 12 percent increase in revenue during the first quarter to $363 million but failed to make a profit.  Uber Eats division increased earnings by 52 percent but apparently also posted a loss.

Many restaurants report poor service and customers are progressively less willing to pay a premium for home delivery given that the economy has moved into recession.

The owner of a casual dining restaurant in Ohio commented, “The apps used by delivery services were good at surging optimization but the companies were terrible at delivery.  Many restaurants relying on home delivery have followed the lead of pizza companies and working with their own drivers.  Restaurant operators are placing menus in orders encouraging direct patronage.

Some municipalities are capping commissions to support local restaurants.  This has resulted in imposition of additional order fees to be paid by consumers.  In a highly competitive environment, delivery companies are extending discounts to smaller restaurants to maintain business resulting in lost revenue.