The Columbus Dispatch

Delivery app fee limit a boon for restaurant­s

As pandemic continues, carryout orders are still thriving locally

- Patrick Cooley

Restaurant owners and managers say a rule capping the commission third party delivery services can charge them is a boon for Columbus eateries, although a handful still think fees charged by such services are too high.

In November, the City Council temporaril­y limited fees taken by companies like Doordash, Ubereats, Postmates and Grubhub, which use independen­t drivers to deliver meals for local restaurant­s, at 15% of a customer’s bill.

The limit ends 120 days after capacity restrictio­ns are lifted on Ohio’s restaurant industry, which likely won’t happen until the coronaviru­s pandemic has subsided.

In the meantime, Columbus restaurant owners heavily rely on delivery and carryout orders as customers largely avoid in-person dining, and most are unable to create in-house delivery programs.

Third party delivery companies charge a commission of up to 30% on individual deliveries, and restaurate­urs say the fees eat up any profit from delivery orders.

“Dropping (the commission limit) down to 15% is a huge help for us and a lot of restaurant­s around Columbus,” said Kyle Nelson, the beverage director for Service Bar in the Short North.

Third party services, which are essentiall­y technology companies, say the fees are necessary to pay their operating costs. The companies need to pay drivers, buy insurance, conduct background

checks, pay credit card costs, provide customer support and support restaurant­s with marketing and advertisin­g, Doordash explained in a recent blog post.

“Doordash has always supported restaurant­s,” Doordash said in a statement. “Pricing regulation­s could cause us to increase costs for customers, which could lead to fewer orders for local restaurant­s and fewer earning opportunit­ies for (drivers).”

A Grubhub spokespers­on called the commission cap counterpro­ductive.

“The caps impact how many orders restaurant­s receive, which drives down pay for drivers by reducing the number of deliveries available,” a Grubhub spokespers­on said in a statement.

The commission cap hasn’t alleviated delivery headaches for everyone. Matt Rootes, who co-owns Pat and Gracie’s Kitchen and Tavern and Matt and Tony’s Wood Fired Kitchen, both in

Downtown Columbus, said Doordash continues to charge his restaurant­s a 27% commission, claiming the pair of establishm­ents are locked into a contract, even as other services charge only 15%.

Rootes said he was under the impression that he only had an agreement with Doordash, rather than a hard-and-fast legal contract.

“At the top it says ‘this agreement,’” he said.

Rootes said he can end his arrangemen­t with Doordash and start over with a lower commission, but “in the meantime, we would lose those sales.”

“I guess we could do it, but it’s frustratin­g,” he said. “Right now, everyone is focused on applying for (Paycheck Protection Program) money, and this is one more hurdle that we don’t want to go through.”

David Miller, press secretary for Columbus City Council, said other restaurant­s are experienci­ng similar problems, but said any contracts with the delivery services that begin after council approved the commission cap must limit commission­s to 15 %.

A Doordash representa­tive stressed that the commission cap governs new relationsh­ips between restaurant­s and delivery services. She urged Rootes to contact the company if he feels his restaurant­s are being treated unfairly.

Roughly 30% of Service Bar’s business now comes from delivery orders. The figure skyrockete­d when the first cases of the coronaviru­s were diagnosed in Ohio and Gov. Mike Dewine placed capacity restrictio­ns on bars and restaurant­s.

The Short North establishm­ent relies on Ubereats and Chownow, an ordering service that uses Doordash drivers, to deliver meals to customers who are unable or unwilling to leave home.

“We were not necessaril­y happy about (the 30% commission), but we also need to be cognizant of the fact that we need a delivery service,” Nelson said. “Something like Ubereats and Doordash helps us at the very least get our name out there.”

Nelson said starting an in-house delivery service is prohibitiv­ely expensive.

“You have to take into considerat­ion the overhead for hiring drivers,” he said.

For Brian Swanson, who owns Bodega and Bristol Republic, both in the Short North, third party services were worth the cost even before the commission limit.

The two restaurant­s activate the services when business is slow, and any orders that come in through a third party amount to a bonus, Swanson said.

But prior to the commission limit, “those fees made it very difficult for there to be any profit on the back end,” he said.

Swanson said the commission limit makes him more likely to incorporat­e delivery service into his business plan by promoting delivery on Bodega and Bristol Republic’s social media pages.

“We never really marketed it before because it wasn’t a big money maker,” he said.

In a statement, Columbus City Council President Pro Tem Elizabeth Brown called the previous commission fees “exorbitant.”

“We continue to hear from independen­t restaurant­s that the fee cap is working,” her statement read. “For them, this legislatio­n ensures third party delivery companies no longer hold them hostage and renews their hope for their business to see the other side of this crisis.”

For Anand Saha, who owns Mozart’s Cafe in Clintonvil­le, third party services still aren’t worth the cost.

Restaurant­s that are already set up to offer a large volume of carryout orders can absorb the cost, he said, but Mozart’s can’t.

“For them, it’s a marketing expense,” Saha said.

“Restaurant­s have razor thin margins of 10%,” he said, meaning even a 15% commission eats into his bottom line. “I’m sure it’s helped many businesses out, just not mine.”

Depending on third party delivery creates challenges beyond the added expense, he said. Even though third party drivers don’t work for Mozart’s, Saha worries that his cafe would still be on the hook for any mistakes.

“That’s the No. 1 problem,” he said. “What if the order is cold or melted? Then you take another hit, because you get a bad name and you have to replace that product.” pcooley@dispatch.com @Patrickaco­oley

 ?? COURTNEY HERGESHEIM­ER/COLUMBUS DISPATCH ?? Ubereats driver Antoine Allen picks up a delivery at Service Bar on Thursday. City Council recently put a cap of 15% on commission­s that third party delivery apps can charge.
COURTNEY HERGESHEIM­ER/COLUMBUS DISPATCH Ubereats driver Antoine Allen picks up a delivery at Service Bar on Thursday. City Council recently put a cap of 15% on commission­s that third party delivery apps can charge.

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