It’s not overly surprising to read that the use of third party food delivery apps is growing. It is said that by 2020, food delivery app usage will surpass 44 million people in the U.S., reaching nearly 59.5 million by 2023. Consumers crave convenience and tech-driven experiences and with the proliferation of the mobile phone and rapid innovation in mobile application technology, food delivery apps such as GrubHub, DoorDash and giants like Amazon and UberEATS have made it possible to meet the (big and growing) appetite consumers have for food delivery.
Typically, though most restaurants do not have the resources to build their own off-premise delivery programs, and third parties conveniently swooped in with a promise to provide relevancy in the on-demand economy. The benefits of partnering with these delivery apps are sold as plentiful: it gives restaurants new revenue opportunities, introduces their food to new consumers and gives loyal fans another way to enjoy their favorite restaurant’s meals. However, it’s not all peace and love between restaurants and their delivery companies.
In a haphazard attempt to remain relevant, partnering with the third-party delivery has come increased alarm and complaints from the companies they serve. One of the biggest gripes, of course, is the fees charged for delivery services often eliminate all profit in the transaction (commonly up to 30 percent of the gross sale) along with the fact that owners lose control over the customer experience with consumers regularly commenting on the poor quality and service. According to studies, should anything go wrong with the order or delivery once it’s left your premises, around 76% of customers will hold your business responsible for issues with their orders. While any third-party delivery company you engage with is responsible for representing your brand and should act accordingly it seems that restaurants have been liable for refunds for delivery errors – even if the restaurants are not at fault! So not only is sub-par delivery costing restaurants repeat business, hurting their reputation but also emptying their pockets. However, that might all be about to change.
Following an investigation of UberEATS in Australia, the consumer watchdog there found that the contractual terms between UberEATS and the restaurateur were unfair. They said the terms caused a significant imbalance between the supplier and the deliverer as they held restaurants responsible and financially liable for elements outside of their control. Previously, if a customer requested a refund, that money could have been deducted from the restaurant – even if the deliverer or Uber itself made the mistake. As a result, the Competition and Consumer Commission ruled that restaurants should only be responsible for refunds for incorrect food orders or other mistakes within their control (which makes sense) and UberEATS (in Australia) has agreed to change their contracts to reflect this ruling. The change has been viewed as a minor victory for small businesses in the face of a multinational corporation. But what about the US?
>While the “unfair” contract change applied to UberEATS Australia only, there are signs that restaurants here are beginning to call into question the line between a right and an abuse when it comes to doing business. Back in June, New York City held its first-ever oversight hearing for third-party food delivery apps which focused specifically on the fees Grubhub and other companies charge restaurants for use of their services. While results of this meeting are yet to be released it is thought that it could set the stage for potential government action that would impact third-party delivery operations in NYC. “There is always the potential that this hearing will lead to an investigative hearing from the public advocate, the city comptroller or the state attorney general,” Councilman Mark Gjonaj.
Although the status quo between restaurants and third party delivery companies remains the same – for now, one thing is certain: “the volume has been cranked up on this side of the delivery conversation, and it’s not going to soften any time soon.”