By: Tiffany Griffith

When the pandemic hit, life as we knew it halted. All but essential businesses were shut down, and we were told not to leave our houses. We watched, terrified, as the numbers and deaths escalated and hospitals reached capacity. The collective population longed for the creature comforts that many of us took for granted, like hugging our loved ones.  

Slowly, life has begun to return to its previous normalcies and pleasures. Restaurants re-opened but with strict regulations on indoor dining and capacity limits. The hospitality industry has suffered tremendously during the pandemic and more than 110,000 restaurants closed their doors for good. Restauranteurs took to every media outlet available and begged the public to order take-out to keep their restaurants afloat. The public listened. 

Save The Restaurants 

Orders flooded into the four mega-companies that dominate the food delivery market, Grubhub, DoorDash, UberEats, and Postmates. These companies raked in around $5.5 billion in combined revenue from April through September 2020, more than twice as much as they earned in the same period the previous year. 

There is no doubt these delivery apps are doing big business. They have been endorsed by a multitude of celebrities like Chrissy Teigen, the whole Kardashian/Jenner clan, and even Prince William. Rapper Post Malone loves Postmates so much he was crowned the most active celebrity user, spending more than $40,000 on the app in a span of approximately one year. DoorDash shelled out millions for a coveted Superbowl commercial featuring the cast of Sesame Street. With a backing like this, Americans all over the world perceived that ordering their Chinese take-out or Taco Tuesday through these apps was doing a great service to a struggling industry in a shaky economy. Unfortunately, the opposite is true.  

The Truth About Delivery Apps 

Companies like DoorDash are charging restaurants fees anywhere from 13.5% to 40%, the average around 30%, just to process orders. To put that into perspective, profit margins for a restaurant are typically between 3-5%, this means that after completing an order through one of these apps, many restaurants break even or lose money. These companies pretend they are saving the restaurant industry when they are, in fact, bankrupting them.  

In an article published by the Washington Post, Pizzaria owner Giuseppe Badalamenti shared his GrubHub receipts showing 46 pizzas ordered through the platform, totaling $1,042.63. GrubHub took their cut of $666.09 in commissions and fees. This left Badalamenti with barely enough to pay for supplies, let alone labor or earn a profit. “I’m sitting there fuming looking at this receipt,” says Badalamenti, “But it’s like an open secret. Owners have been suffering in silence, because they’re ashamed, and they think this is what you have to do because this is what everyone is doing.” 

A sizable portion of the fees administered by these apps do not go toward the delivery drivers or any practical business expense, but rather for “promotions” — a restaurant’s way of ensuring that they do not get buried in the app’s search results. GrubHub, over the span of several years, accumulated tens of thousands of URLs related to restaurants and set up fake websites designed to optimize Google’s search engine results. A customer looking to order from a particular restaurant could open the fake website, that looks almost identical to the company’s real website, complete with their logos and full menu (often the GrubHub prices are inflated above the restaurant’s actual price) and they are then unwittingly directed to the GrubHub app for purchase. GrubHub maintains that they have permission in their contracts with the restaurants to do this but have since stopped the creation of faux websites.  

Another lawsuit, based out of Philadelphia, accused GrubHub of posting different phone numbers for partner restaurants on its websites and through Yelp, then charging the restaurant commissions for every phone call received, even if those calls did not result in orders. In fact, lawsuits have become the norm for these companies, and they are shelling out millions on legal fees every year. Collin Wallace, a former GrubHub engineer, vented about his ex-business partners, stating that these apps are “not actually in the business of delivery. They are in the business of finance. In many ways, they are like payday lenders for restaurants and drivers. They give you the sensation of cash-flow, but at the expense of your long-term future and financial stability.” He goes on to say, “and there are no repercussions, because these companies spend more every year on legal fees than they will see in their entire life cycles.” 

Now restaurants are beginning to fight back. A class-action lawsuit filed in New York in April 2020 alleges that the four delivery apps are forcing restaurants to guarantee their prices will remain the same for both dine-in and app-related purchases, absolving them of having to compete on price. The suit also alleges that these companies have agreed to not infringe on one another’s geographical turf, creating a monopoly, as Grubhub serves the majority of New York, DoorDash claims San Francisco, UberEats has Miami, and so it continues for all major metropolitan areas throughout the nation. 

The Gig Workers 

Unfortunately, exploitation of restaurants is not the whole of the issues plaguing food delivery services. The pandemic spurred record numbers of unemployment, the highest since the Great Depression, and people have flocked to “gig” work (jobs that pay per gig, such as delivery) by the millions to survive financially. To put this in perspective, shopping service Instacart brought on 300,000 new shoppers in just one month, October 2020, more than doubling its workforce. This means there are millions of people competing for lower and lower paying gigs. Delivery drivers are hired as independent contractors. They have no entitlement to minimum wage, overtime pay, sick leave, insurance, benefits, or reimbursement for work-related expenses. Additionally, they cannot join unions and have no legal protection against unfair treatment or working conditions. 

Jeffrey Fang, a DoorDash driver, was delivering on a Saturday night in a quiet residential neighborhood when he encountered a carjacker who made off with his van and two small children inside. Thankfully, Fang’s van and children were found unharmed four hours later. Instacart worker Tyrita Franklin-Corbett was bitten by a customer’s dog while making a delivery. She was forced to stop working for two weeks and received only $60 in compensation from Instacart over the incident. Franklin-Corbett said she used to make around $300 in a few hours pre-pandemic, and on her most recent trip that took her over an hour and a half to complete, she made $9. “I have to work twice as much to make half of what I was making to survive,” she said. Lawsuits have been filed against Uber, Lyft, DoorDash, Postmates, Instacart, and more, accusing them of misclassifying their employees as independent contractors because it is cheaper and allows them to skirt laws for employee rights and benefits.  

Finding A Solution 

As Americans become more informed, many are asking what they can do about it. Ordering take-out from restaurants is great if you order directly from the restaurant and pick it up yourself. If you must have delivery, call the restaurant and ask if they employ their own drivers as many are partnering with neighboring businesses. Restaurants encourage customers to order hours or even days ahead, as it allows for them to plan and account for delivery services. There are some small enterprises attempting to fight the corporate conglomerates. In Washington, DC, the owners of the restaurant Ivy and Coney launched a nonprofit called DC To-GoGo, featuring a collection of local restaurants that will limit fees to 5% for processing and 15% for delivery. Their website touts that they were, “started by a small team of service industry veterans who were (are) naive enough and optimistic enough to think they could take on a multi-billion-dollar industry”. Co-owner Josh Saltzman says, “We went into it thinking, we want to make sure drivers are making at least $18 an hour and that food is hot.” With those goals in mind, “you realize the system as it’s set up doesn’t work.”    

The bottom line, your money does the talking and every order counts. Every purchase, be it from a restaurant or a grocery store or clothing retailer, tells a business or organization what you prioritize and value. If you care about small locally owned restaurants, the people risking their health and safety working in these establishments, and the delivery drivers accepting gig jobs for chump change, you must withdraw your support from exploitative delivery services. You must put your money where your mouth (or conscience) is.