This is part of a series highlighting Lansing-area restaurants adapting to the threat of COVID-19 and a new normal.
Ordering dinner from a struggling local restaurantduring thesepandemic times is a small act that many of us see as a responsibility. It’s one way those of uswith disposable income can do our part. It’s quite the sacrifice, eating a juicy burger or a pizza that tastes like heaven.
It is something, though. And you bet it’s appreciated.
But if you’re ordering your food through a delivery service — be it Uber Eats, Grubhub or DoorDash —you’re not actually doing much good right now. All that your chosen restaurant gets out of the deal is the pleasure of cooking your meal.And all you’ve done is enable a predatory third-party business.
In these delivery transactions, the restaurant is making about 70 cents on the dollar — after fees and tips — cutting out their entire profit margin, if they’re lucky.
“By the time you’re done, it’s pennies left over,” said Scott Rolen, co-owner of Lou & Harry’s in East Lansing.
These delivery services are a partner that can be tolerated in good times, when dine-in eating is the norm and having a delivery option is a promotional tool for the restaurant. These, however, aren’t the times for long-term marketing. It’s about keeping enough cash in hand to keep the lights on.
If you want your dinner choice to have a positive impact on our community and you feel safe on the move and your car still starts …
Curbside pickup or carryout, please.Then every penny goes to the restaurant you’re trying to support.
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For restaurants that are down 75 to 90 percent in sales and facing soaring beef costs (about double what they’re used to paying), the margins matter more than ever. And these delivery services are no friend to those margins or the restaurants they serve. And by serve, in some cases I mean extort.
“I had a phone call with a Grubhub administrator just last week,” Rolen said. “I was like, ‘Is there any way we could get some of these hidden costs off, because it’s killing us?’ ”
The answer, of course, was no.
DoorDash has cut its fees in half through May for restaurants with fewer than five locations and, when contacted, explained that every dollar from fees goes to fund the operation and structure restaurants rely on. A Grubhub spokesperson touted Grubhub’s COVID-19 community relief fund and said it’s also offered to defer payment of marketing fees to eligible restaurants, though they’ll still owe those fees in time.Uber Eats didn’t respond to a request for comment.
Some restaurants are making it clear on their websites just how much Uber Eats and Grubhub take from them, so customers understand it — if those customers are on their website at all. Therein lies one of the problems: When we order, either out of habit or carelessness or lack of understanding, we’ve often already clicked on a Grubhub menu.
Google “Pizza House and delivery.” The top link is from Grubhub. Try “Saddleback BBQ and delivery.” You’ll see Uber Eats first.
“How it works is the delivery platforms come into a market, and they usually start by putting all of the restaurants’ menus on their platforms,” said Travis Stoliker, co-owner of Saddleback BBQ in Lansing and Okemos. "They basically scrape the internet, find our menus and they list us and they create essentially websites that are about our restaurant. And they haven’t gotten permission to do that.
“If somebody ends up placing an order on their platform, what they do isthey just call into the restaurant and they place a normal takeout order and they show up with a credit card and they deliver the food.”
No one in the Lansing area has been more visible in challenging the heavy-handedness of the delivery servicesthan Stoliker, who last week posted a video on Facebook and published a blog post that went viral, digging into these mafia-like practices.
“What happens is, they approach us about actually being partners and we need to sign contracts with them in order to be on their platform as a partner,” Stoliker said. “And in those contracts, there are a few clauses that are interesting. One of them is that, of course they get the delivery fee, the service fee and the tip that they charge to the customer. And that part is really transparent. Everybody can see what the delivery fee is, they can see the service fee and they obviously know what they tipped them. What the customer doesn’t see is on the other side.
“There’s usually a 10 percent fee that is just your fee for being on the platform. Now if you do pickup through something like Grubhub or DoorDash, in some cases the restaurant will only pay the 10 percent fee to be on the platform. But on a delivery, the average is 30 percent. So if somebody places an order for $10 on any of these platforms and the restaurant is a partner, the restaurant only receives $7 for that.”
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The simple solution, it would seem, is tonot be a partner. But here’s where it gets underhanded. If you don’t play ball, there are consequences, restaurant owners say.
“The secret here is it’s nearly impossible to be removed from the platforms,” Stoliker said. “It’s not like you can just send a request and say, ‘Hey, remove us from the service.’ That doesn’t happen. They do it regardless.”
If you’re not a good partner, Stoliker said, they’ll work online to send your customers to those that are.
“We would never do anything of that nature,” a Grubhub spokesperson said.
“They’re using that money we’re paying them to buy ad space,” said Mike Krueger, owner of Crunchy’s in East Lansing, “to buy Google ads and online ads and to get to the search engines and that’s what people see when they go to search for one of our restaurants and they click on a DoorDash or they click on an Uber ad.”
These aren’t new revelations. Grubhub last year was caught setting up fake websites and using phone numbers that went to them instead of the restaurant you thought you were calling.
The more you dive into this rabbit hole, the less you’ll want your food delivered. It’s nauseating.
The counter to this, for restaurants, is to brazenly break the rules of their contracts with these services,which require you charge the same price in the restaurant as you do on their menu.
A week ago, Saddleback BBQ began pushing back.
“We just recently increased the fees on all the platforms to cover the 30 percent that we’re charged,” Stoliker said. “That means that we could get kicked off of these platforms at any time. They could decide to enforce that rule in the contract and boot us off the system.”
The consequences of that might include Grubhub and Uber Eats funneling Saddleback’s potential customers tocompetitors. It’s a risk Stoliker is willing take now that they’ve got their own direct delivery plan — using DoorDash Drive, which allows restaurants to control the deliveries through their point of sale systems for a flat fee of $7.50 per delivery. Eventually, at Saddleback, that’ll be shared with the customer.
Crunchy’s is starting this week, as well. You pay $3.75 and they cover the other $3.75.
“As long as our average ticket is more than $12, then it’s a better deal for us (than standard delivery services),” Krueger said.
This also allows the restaurant to build the customer relationship, rather than the delivery service only having their information.
Not every eatery has a system with in-house delivery capabilities to take advantage of this. And if they do, you still have to call the restaurant directly or go through their actual website for them to use it. That’s on all of us, the consumer, too, to pay attention, to make sure that’s who we’re speaking with and ordering from.
Most of the restaurants in our community aren’t built to rely on delivery. They’re not structured to be efficient during a pandemic. They didn’t see COVID-19 coming when they poured their lives into this business.
“If pick-up sales are 50 percent and our delivery sales are 50 percent, that’s a helluva difference from when our dine-in sales were 92 percent and our delivery sales were 5 percent or 8 percent,” Krueger said.
Hiring their own drivers right now doesn’t work because business mostly happens duringa few peak hours. Lou & Harry’s tried last year, in normal times, and abandoned the idea after a few months.
“Carryout is tremendous,” Rolen said. “When we get people to call the store, place an order and pick it up, that money 100 percent goes to the store. Every cent comes to us, instead of 30, 35 percent going to these companies.”
“When the delivery platform takes 30 percent,” Stoliker added, “it means almost all restaurants that are using the delivery platforms are running at break-even or actually at a loss for every time you place an order.”
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Contact Graham Couch at gcouch@lsj.com. Follow him on Twitter @Graham_Couch.
