Are delivery apps helping or hurting local restaurants?

Offering delivery is more important than ever during the pandemic. But some restaurateurs question whether using delivery apps is worth it.

In a cramped corner at the back of the Speak Easy Cafe on George Street, owner Vickie Karikas manages online orders as they come in through the SkipTheDishes app.  

“We can get up to 35 to 40 orders on the weekend each day,” she says, “which is [like] filling our restaurant four times over.” 

For restaurants fighting to stay afloat during the pandemic, offering a delivery service is more important than ever right now. While some local restaurants have online ordering systems on their own websites, the Speak Easy, like many others, doesn’t. That means Karikas relies on SkipTheDishes instead, but she says the commissions the app charges are so high it doesn’t help her bottom line all that much.

“SkipTheDishes has brought in a lot of revenue,” says Karikas, “and they’ve taken a lot of revenue at the same time. So it really is a double edged-sword.” 

“We need to have Skip[TheDishes], especially through COVID, but [we] really wish that they would lower their fees,” she says.

The commissions charged by SkipTheDishes on food orders appear to vary restaurant by restaurant. When asked by Peterborough Currents, a company spokesperson did not provide information on how it calculates commissions, writing that its partnerships with restaurants are confidential contracts. 

But commissions appear to range from 25 to 30 percent. Martin Carbajal, the owner of La Mesita Mexican Restaurant on Hunter Street, says SkipTheDishes charges his business a 30 percent commission on every order.

Like Karikas, Carbajal is ambivalent about the value of delivery apps to his business. He says being on the SkipTheDishes and DoorDash platforms gives his restaurant visibility it otherwise wouldn’t have. But the orders he receives through the apps don’t help him financially.

“It doesn’t really make any money, in fact I actually lose a bit,” he says. “But it’s a way so people can know about us.”

In order to recoup at least some of the commission fees, Carbajal only offers a limited number of custom combos through delivery apps, and he charges slightly higher prices on the apps as well. 

Carbajal encourages customers who want delivery to take a different approach: phone the restaurant and place your order directly. Then, he can hire a local business, A&B Delivery Service, to do the delivery. A&B charges a flat rate of $6 per delivery, Carbajal says, but he only passes $5 of that on to the customer. (SkipTheDishes’s advertised delivery fees, which the customer also pays, range from $3.49 to $4.49.)

Martin Carbajal, owner of La Mesita Mexican Restaurant on Hunter Street. Carbajal encourages customers to phone the store directly for delivery rather than use a delivery app. It’s cheaper for both the customer and for him that way, he says. (Photo: Will Pearson)

By calling the restaurant directly, a customer has access to La Mesita’s full menu and lower prices as well, Carbajal says. “It’s way cheaper for the customer and for me if they call us.”

The pandemic has created a significant business opportunity for delivery apps around the world. Last week, the parent company of SkipTheDishes, the Amsterdam-based Just Eat, reported that its Canadian orders surged by 98 percent in the third quarter of 2020, compared with the same period in 2019. 

In response to the pandemic, SkipTheDishes has rolled out what it calls an “impactful support package” to help its restaurant partners. 

“We know that Skip has become not only a tool to practice social distancing, but also a way to support local businesses during the pandemic,” says CEO Kevin Edwards, according to a press release issued last week. 

Most substantial among the restaurant supports is a 25 percent commission rebate. A rebate of that size would bring a 30 percent commission down to 22.5 percent. According to the SkipTheDishes spokesperson, the support package offered to Canadian restaurants has been worth $24 million since March.

With a second wave of coronavirus infections already here, the company is continuing its commission rebate. But currently, the commission rebate is only available in regions where public orders have closed dining rooms to curb the spread of COVID-19. That means restaurants in Peterborough, where dining rooms are allowed to be open, aren’t eligible.

At the Whistle Stop Cafe, employee Will Stevens estimates about one-third of the restaurant’s business is done through SkipTheDishes right now. And at the beginning of the pandemic, that number was closer to 50 percent. 

But Stevens speaks more positively about the app. “You don’t make as much profit as you would if somebody [came] into the restaurant,” he acknowledges, “but because we can now reach that different audience … it does more good than harm.” 

Still, Stevens says it’s better for the restaurant if customers come and pick up their food rather than order a SkipTheDishes delivery. And as an employee, Stevens offers another perspective: “We don’t get tips through SkipTheDishes. The only people who get tips through SkipTheDishes are the drivers,” he says. “So we obviously prefer if people are in here because then we get tips.”

Karikas, at the Speak Easy Cafe, says her staff have grumbled a bit about the loss of tips, too. That’s why she tries her best to work the SkipTheDishes station herself, so that her staff can work the dining room and earn tips, she says. 

In March, SkipTheDishes implemented a new feature that allows customers to “show their local love to restaurants” by adding a tip, the spokesperson said. It is up to restaurant owners to determine how those tips are distributed.

Ultimately, Karikas says SkipTheDishes needs to lower its commission in order to become a better partner for restaurants. “We need a government intervention on capping commission rates,” she says.

“I know that Doug Ford has called on them many times to do so. However, SkipTheDishes is based out of Winnipeg, so we need [Manitoba’s] premier to step up, or the federal government to take a look at that.”

Karikas believes a 12 or 15 percent commission would be more reasonable.  

Karikas will continue using SkipTheDishes, but she’s not enthusiastic about it. “We’re supposed to be restaurant partners,” she says. “They’re horrible partners. They’re silent partners who just want their money.”

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