Restaurants push to maintain delivery app caps as they bounce back from COVID-19 pandemic
Restaurant owners claim that food delivery apps have cut their income too much for too long.
Food delivery apps were forced to implement lower fees when the food service was closed during the COVID-19 pandemic, and restaurants say the change should be made permanent if they are to recover from crisis.
“I really hope they keep the fees lower because it helps a lot,” said Sharon Bond, owner of Westbank, BC’s Kekuli Cafe. “The costs have increased enormously.
“We’re in a pandemic so (everyone says it), ‘let’s charge triple for everything. “
His remarks come as caps on fees charged by delivery apps have been lifted or are approaching end-of-summer dates in several provinces.
Food delivery companies typically charge restaurants a commission for each delivery, sometimes up to 30 percent of the cost of the order. Fee caps were added by five provinces after dining rooms were forced to close for months during the pandemic, increasing their reliance on meal delivery apps to pay bills as many offered take-out for the first time and did not have the mechanism to deliver the delivery themselves.
Ontario, British Columbia, Nova Scotia, Saskatchewan and Quebec temporarily capped commissions between 10 and 20 percent as long as door-to-door orders or restaurant closings were in place.
When asked if they would consider extending their caps, the provinces said the measures were meant to be temporary, although spokespersons noted that additional measures such as patio allowances continue.
When the pandemic struck, Bond had no choice but to use third-party apps for the first time to deliver bannockwiches and tacos to patrons at his native restaurants.
She wants B.C.’s 15 percent cap to stay because it has helped the restaurant survive and avoid staff layoffs, but said it will be months before they serve a new one. full dining room.
Kevin Edwards, general manager of SkipTheDishes, wants to see restaurants bounce back from the pandemic, but called the prospect of a permanent ceiling “frightening.”
“There is no way we can maintain our platforms with these commission caps,” he said.
SkipTheDishes charged restaurants a 25% commission on pre-pandemic meals, but when the crisis began it used a discount to ensure independent local restaurants pay less than 20% commission while on-site meals are suspended.
New restaurants that joined the platform during the restrictions received no commission for 30 days, and those that used their own staff for deliveries paid a 10.5% commission.
Meanwhile, Uber, which typically charges a 30% commission, reduced pickup fees to zero, online orders to 7.5%, and 15% for restaurants doing their own delivery.
When asked about the caps, the company said in an email that it was operating at a “negative margin” and that the charges did not provide Uber with any profit, and that the company had to be able to cover the operating costs. .
The provincial caps, Edwards said, were passed with little consultation or notice and ignored existing relief programs or the more pressing needs of small businesses.
For example, he said many of the caps weren’t just focused on independent restaurants, so national chains and other successful brands accounted for between 50 and 60 percent of the discounts Skip gave.
If the caps continue, he imagines it will become more difficult for delivery services to expand into new markets and manage costs.
“The customer is going to have to bear the burden,” he said. “You cannot not be viable.”
But the higher fees are weighing on restaurants, especially as they try to recover from a crisis, the Canadian Federation of Independent Business said.
The organization, which represents at least 110,000 small businesses, said in an email that it is confident major food delivery apps will keep their pricing structures at current levels or even lower.
If fees returned to previous levels, the group said governments should consider how to ensure reasonable prices.
Toronto restaurateur Chieff Bosompra estimates that the best zone for expenses is between 10 and 15 percent, but admits that even 20 percent is acceptable.
Given how many people are affected by fees, he would like an industry working group to give app companies, restaurants, couriers and cities a place to discuss how fees and policies can be fair for all.
“It’s like a gift and a curse,” he said of delivery apps.
“We need them and they know we need them, so they’re really rushing us.”
He first met with delivery app commissions months after the start of the pandemic, when he opened Aunty Lucy’s, a burger restaurant named after his late Ghanaian grandmother, who died on the day of the opening.
As a black entrepreneur going into business after George Floyd’s death, his restaurant was given prime spots on some apps, but simultaneously charged high commissions.
He raised prices because of his high fees and rising prices for beef, chicken and lettuce.
“But there’s only a certain amount you can really charge for food and the profit margins are pretty slim,” he said.
“Things get more and more expensive and when you have to pay 20% or 30% it makes it really difficult. “
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