Denver diners who order restaurant food through third-party delivery apps may notice a surcharge applied to their next dinner order. DoorDash recently introduced a $ 2 Denver fee to offset revenue lost in the pandemic as a result of commission caps imposed by the city.
The fee follows the decision by the Denver City Council in October to set a 15% cap on commissions that delivery companies like DoorDash, Grubhub, and Uber Eats may charge for restaurants. These commission fees – which vary by delivery company and restaurant to restaurant – are paid for driver wages and background checks, credit card processing, customer support, insurance, advertising, and the website platform itself, according to DoorDash.
When the city council considered a 15% cap, delivery companies warned that any revenue from such laws could ultimately be passed on to consumers. In the past, these companies have charged restaurant commissions of up to 35%.
However, DoorDash is the first in Denver to charge such a surcharge. A company spokesman said measures like the “Denver Fee” were “necessary to offset (the) unintended consequences” of “pricing regulations that limit our ability to work with restaurant partners.”
“In some cases, this means customers charge an additional fee when ordering from restaurants in their city so that we can continue to offer them convenient delivery while ensuring that dashers are active and earning and that merchants are accessing the services can to increase the volume Dinner remains limited, “said the spokesman.
During the pandemic, independent restaurants have sounded the alarm about third-party delivery services and their predatory pricing structures. The relationships between restaurants and delivery companies are often close. On the one hand, restaurants rely on these services; On the other hand, their already narrow profit margins are increasingly being cut by costs.
“The (delivery companies) are enforcing our hand,” Eric Norberg, general manager of Aloy Modern Thai in downtown Denver, told the Denver Post. “And now they can feast on the fact that we all depend on them.”
On a final day of the week, a single order from Aloy cost 30% more than DoorDash than on the restaurant’s own website. To pull customers away from these sites, Aloy is offering a 10% discount to anyone who orders directly from the restaurant. They work with a bike courier to deliver downtown and otherwise provide roadside pickup so you don’t have to park. As Norberg points out, this also gives his employees tips. Tips are only given to drivers if ordered through a third-party app.
Prior to the pandemic, Aloy relied on take-out and delivery for about 50% of its business, Norberg said.
“The good thing is that we adjusted to it when we entered this stage,” he said. “But the problem is that we don’t have these dine-in customers anymore. So while the volume has increased, the fees add up. “
Due to the increased demand for supplies during various stages of shutdown, Aloy had already paid $ 80,000 more in August than in the previous year for delivery commissions from third parties. And Norberg estimates a 10% drop in profits for the company due to the delivery. Compare that to an average profit margin of 10% or less in the restaurant industry – “if you do everything right” – and the cost of delivery is even harder to justify.
Because of this, some companies take the plunge and start delivering themselves.
The Post Brewing Co., a Big Red F restaurant, has bags and beers ready to go. The restaurant is one of five family businesses running a new in-house delivery service called WeDeliver. (Provided by Big Red F)
Boulder-based Big Red F Restaurant Group last month launched WeDeliver, a free (for now) in-house delivery service that works for five restaurant brands with multiple locations in Denver and the Front Range. Each restaurant location could employ up to eight drivers, Audrey Quistorff, chief operating officer, told the Denver Post.
“The role of delivery is huge for us so our staff can work on it,” she said. “Since our dining rooms are closed and our sales are overcrowded, we can use this delivery platform to let our buses, chefs, bartenders, servers, hosts – everyone – get into the delivery options.”
To offer delivery, Big Red F must provide proof of insurance from drivers and sign a release waiver. Quistorff stated: “We have worked closely with our legal team and the liability insurer and we suggest everyone else do the same. Delivery service do the same. “
But the pilot is already paying off for the restaurants, their employees and customers, she says. Restaurants can control their products and their service from start to finish. And hopefully the guests can tell a difference at the door.
“Our average guest tips for WeDeliver are usually 18 to 20%,” said Quistorff. “So the net is that we save the 15-35% cost of the third-party fee that is incurred with every delivery, we employ our own team members as drivers and the tips benefit our hourly team members directly. A tip-share model in which everyone Tips are kept and shared in order to achieve wage equality in the front and back of house. “
While Big Red F is busy building its delivery customer base, the company continues to partner with third-party platforms like DoorDash and encourage customers to visit the restaurants’ websites directly when they can. One thing that could help them with this, besides eating, is beer, liquor, and wine right on their doorstep.
“Maybe (guests) want to see what kinds of beers and wine and cocktail packages we have for roadside pickup and then they see that we have WeDeliver and they realize they don’t have to come to collect it,” Quistorff said . “You could then order more often directly from us. We can also … deliver alcohol which the third party can’t do for us, so that’s huge too. “
Updated December 2nd at 2:03 pmThe following corrected information was added to this article: The name of the General Manager of Aloy Modern Thai was previously misspelled due to a reporting bug. It’s Eric Norberg.
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