RSG133: Why are app delivery fees so damn high?!

One of the trends that’s been accelerated by this pandemic is food delivery. For those orders, many people use third-party apps like DoorDash, Postmates, Uber Eats and more. Today, I’m talking with an expert on food delivery (he’s been on the podcast before – check out the show notes). We’ll be talking about app delivery fees – why are they so high?!

Intro

  • Today I’m talking with Matt Newberg
  • Dive into what’s going on behind the scenes with all the fees
  • From all points of view – customers, restaurants, couriers, and the companies themselves
  • Plus, we’ll cover what cities are doing to limit fees and what options restaurants have to minimize fees

Intro to Matt Newberg

  • Matt Newberg is the host and producer of HNGRY, a multimedia platform exploring the impact of technology on our relationship with food
  • Spend the last 8 years working in the tech industry as an entrepreneur
  • Focused on massive shifts in consumer behavior, including fungi-based meats and robot-powered grocery stores
  • Food delivery has come to the forefront

Food Delivery Fees

  • Preying on weakness of restaurant owners
  • The model is broken, even though demand is growing
  • Would big restaurants join these third-party apps if not offered discounts?
  • 15% marketing and 15% delivery – charging around 30%

What Options Do Restaurants Have?

  • Restaurants say these companies have too high of a take rate – what other options are there?
  • General lack of awareness around other options
  • Demand from consumers is for these companies – want to be convenient
  • At the end of the day, restaurants are making money with these apps – just not as much

What Are Cities Doing About These Fees

  • San Francisco, New York, Seattle have instituted fees, at least during the pandemic
  • Impact – lowered demand
  • Delivery companies subsidizing some of the higher demand restaurants
  • Remains to be seen if customers will continue to pay higher prices

Solutions for Restaurants

  • Vertically integrated markets, in some cases (Domino’s example)
  • Use different services and APIs – white label ordering platforms
  • Some restaurants are doing well with this, pivoting to different types of delivery
  • Virtual food court idea – a few different brands under one kitchen
  • Some restaurants are trying to fight this – stick to dining in

Trends for Restaurants and Dining

  • Dining in – most likely not going to save restaurants
  • Same old, same old is not going to work
  • Think about bringing the experience to your customers
  • Forming partnerships with other businesses – bars, etc.

Outro

  • Big thanks to Matt for coming on the podcast!
  • Keep an eye out for his new series on food trends (link in the show notes below)

Show Notes