Across the country, third-party food delivery apps have become a part of everyday life. But beyond their marketing-fueled facade of convenience and instant gratification, they’re killing the restaurants we love.
Lured-in with signup deals and hooked with the promise of sales boosts, restaurants are discovering that life inside the web of big tech is unsavory at best. With commissions as high as 40% on every order — on top of a delivery fee and service charge — these apps are forcing restaurants to sacrifice a large slice of their already razor-thin profit margin.
The average restaurant only nets a 6% profit.1 If a restaurant only keeps 60 cents of a $10 sandwich, an added commission of 40% whittles their margins down to nothing. In many cases, restaurants lose money on these orders.
And as third-party food delivery apps gain popularity among diners, restaurants are seeing sharp spikes in the kind of delivery orders that hurt them the most. This is simply not sustainable. With nearly 11,000 independent restaurants closing in the U.S. in 2017,2 our very own communities are at stake.
I think it’s fool’s gold for the restaurant owner. The reality is, you’re only helping out the delivery company. You’re not helping out the restaurant.
Local restaurants are the lifeblood of our neighborhoods. They’re where local teens work their first jobs, where families celebrate milestones big and small, where civic business decisions are made over coffee. These independent businesses re-circulate 48% of their revenue back into the local community.4
But as food delivery apps continue to bulldoze local restaurants, chain restaurants are the only ones who can weather the storm. Imagine a world without the wood-fired pizza place, the colorful corner seafood restaurant, or the beloved breakfast joint that’s been family owned and operated for over 50 years. Talented chefs without deep pockets will work for chains, cooking the same menu items served nationally. Less creativity. Less risks. Less moms. Less pops.
That’s why we’re working for a brighter future for the restaurant industry — one where local restaurants remain at the center of local culture.
At ChowNow, we believe that how we order matters. Because not only do local restaurants need to worry about rent, staffing, food costs, and extremely high margins, they’re up against big tech, too.
That’s why our business is designed with restaurants’ success in mind.
Instead of tricking diners into unknowingly hurting local restaurants, ChowNow provides a better way to order — a way that helps them support restaurants without sacrificing the convenience they expect.
Platform Commission Rates and Profit Lost by Restaurants3
All third party delivery services take a percentage fee. It takes away from the revenue that we can make when you order in house. When you go directly to the small business, we get the full revenue versus upwards of 30% to a third party service.
Delivery services are a killer to local business because you're basically working your ass off, paying for labor and expenses, and they're taking 30% from you, which is your profit.
Customers don’t understand the relationship between the restaurant and ordering from those online sites. They don’t understand that it’s hurting our business. Now it’s a necessary evil.
I had to find a way to move my customers from companies like Postmates, DoorDash, Grubhub, and Uber Eats because of the percentage that they charge to us, and also the delivery fee that they charge to them.