July 12, 2024


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Can Food Delivery Work for Everyone?

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For many people — and restaurants — food delivery was a lifeline when in-person dining felt too risky or was closed during the pandemic. That habit seems to be here to stay, and now everyone involved is trying to figure out how to make the delivery business work for them.

My colleague Kate Conger wrote on Friday about the resilience of food delivery as the coronavirus pandemic eases in the United States. She spoke with me about how restaurants and app companies like Uber Eats and DoorDash are reimagining post-pandemic home delivery and addressing complaints, including fees and complexities that rankle restaurants and some diners.

Shira: Lots of restaurants around the U.S. are saying that people are packing their dining rooms again and that restaurant delivery orders haven’t dropped much from pandemic levels. How can both be happening?

Kate: It’s clear that many people found these delivery apps useful during the pandemic and are willing to keep using them even if it costs them more. I hesitate to predict whether pandemic behavior will stick around forever, but I think the DoorDash executive I interviewed is probably right: It’s often hard for people to backpedal from activities that they find convenient.

What do restaurants think about the possibility that delivery apps might be a permanent part of their businesses?

It’s a mix. There are people like May Seto, a restaurant owner who repurposed her catering kitchen to make pizzas customers can order only for takeout or through the delivery apps. She believes delivery is here to stay, and she’s modifying her business to accommodate it. Other restaurant owners can’t wait to dial back on delivery because they resent the costs and the annoyances.

And there are people in the restaurant industry who are in the middle. They believe that delivery can be lucrative and important, but some of them are lobbying for changes to make the app services more sustainable for them, like limits on the fees that the app companies charge.

Have delivery app companies responded to any of those concerns?

In some cases, yes, and politicians have intervened to force change, too. DoorDash is now giving restaurants more fee options. Instead of taking up to 30 percent or so of a restaurant’s sale, the restaurant can pay 15 percent just for delivery and then pay more for extras like appearing higher in app search results.

San Francisco put a permanent cap on the fees that delivery apps can charge restaurants, and other cities imposed temporary limits during the pandemic. Some restaurant owners are concerned that the math won’t work for them if those fees return to previous levels.

There are restaurant owners, delivery couriers and diners who have major gripes about food delivery apps. And the app companies are still mostly unprofitable. Do you see these as temporary issues or is there something fundamentally broken with food delivery?

It’s growing pains and also the trade-offs of convenience. Job hunters might consider aspects of delivery work unappealing, but it’s also a position that they can sign up for fairly easily and start right away. Diners may not love that a delivered meal isn’t as fresh as what they’d get in the restaurant and costs more, but that’s a trade-off that many are willing to make to get food on the table. Many restaurants in the past year needed delivery when their dine-in businesses shrank, even if there were aspects of it that they didn’t like.

Can restaurants be an appealing place for in-person dining even while churning out meals for delivery? Grocery stores are struggling with that double duty.

It’s not always easy. The ability to do both delivery and dine-in well depends somewhat on a restaurant’s physical space. For restaurants with small dining rooms, it can be disruptive to have a delivery courier coming through the door every few minutes in the space where people are eating. But I’ve also spoken to restaurants that have more room and can dedicate one counter to delivery orders and also have enough parking spots out front for both in-person customers and couriers.

Why are DoorDash and Uber expanding into delivering all kinds of things like groceries, alcohol and convenience store items? Is that an admission that it’s hard to make delivering food profitable or sustainable?

It’s a good question. The restaurant business doesn’t have high profit margins. That doesn’t leave much wiggle room when the money for a meal order is divided among a restaurant, a delivery courier and the app company.

Delivering more kinds of products can cushion app companies if customers gravitate away from restaurant delivery. And it’s also a way to try to generate higher-priced orders. If you order dinner from DoorDash and tack on some items from 7-Eleven, then you spend more and there’s more potential for everyone involved to turn a profit.

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It’s Friday. It’s almost a holiday weekend. Please enjoy Muffin enthusiastically doing the dog (or puppy) paddle.

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