Third party food delivery. No matter where you turn, there seems to be a news story every other day about third party food delivery – and not for the right reasons. Disputes between restaurants and third-party food delivery services—such as Grubhub and Uber Eats—have made headlines over the years. More recently the issue of customer data sharing, or lack thereof, has come to the surface. But a newly-introduced New York City Council bill proposes to address this key challenge by requiring restaurant aggregators to share customer data with restaurant. If passed, the bill would give some power back into the hands of pandemic scarred businesses.
Third Party Food Delivery: A love hate relationship
Pre-Covid, food delivery was becoming an increasingly integral part of the restaurant industry. Many restaurants outsourced delivery choosing to collaborate with third-party gig economy partners like Grubhub and Doordash to facilitate their off-premise services. While this approach removes the administrative and logistical burdens associated with managing in-house delivery, it is now a well-known fact that these partnerships come with multiple downsides. From hefty commission fees, to disputable order charges, loss of control over the delivery experience, to listing restaurants on platforms without the restaurants’ permission, there has been a growing discontent among restaurants with third-party delivery companies.
In addition to the above issues mentioned, when restaurants partner with a third party, they ultimately sever the connection between restaurant and customer. As part of their contractual agreement, third-party food delivery services retain all customer data.
So, while restaurants work diligently to build a loyal relationship with customers, once third-party delivery companies arrive on the scene they effectively insert themselves directly between the restauranteur and the consumer. Not only are they then free to capitalize on the information obtained from users at the expense of their restaurant partners but they can damage the restaurant’s brand and relationship with the end consumer. If anything goes wrong, from placing the order to delivery of the food, it’s out of the restaurant’s control, but the problem still becomes the restaurant’s responsibility. A survey of 42,000 people by Service Management Group found that 35% of customers experienced a problem when using a third-party delivery service, and almost half of them faulted the restaurant.
Not surprisingly restaurants are, to put mildly, angry with this “all take, no give” relationship. And while this practice by third-party food delivery services predates COVID-19, the pandemic has put this all issues into sharper focus.
Third Party Food Delivery: Restaurants want to take back their customers
With the onslaught of Covid, third party food delivery have been critical in weathering the crisis – but at a high cost. Restaurants were already running on slim margins before COVID-19 but now with restrictions being lifted and restaurants reopening for diners, continuing their partnership on the same terms is no longer viable. Not only do service fees cut too deeply into the bottom line but restaurants no longer want to, or can afford to, surrender their valuable customer data. Restaurants want to take back their customers. And they are starting to push back. Hard.
A bill, introduced last week, with support from the New York City Hospitality Alliance, has long called for more data sharing. That data would include names, email addresses and other information restaurants covet for marketing purposes. With this data, restaurants would be in a better position to directly manage their relationships with their customers. This legislation is so important because it removes a major barrier certain third-party delivery companies place between restaurants and their customers, by enabling them to directly manage their relationships with their customers, offer them deals, market to them, and more,” the group said in a statement.
Predictably, delivery companies aired concerns about the bill, arguing that handing over the data would violate customers’ privacy. The ironic thing about their concerns is that they already share and pass on said data with other external parties. Customer data that they obtain from restaurants is often sold or shared with other contracted partners – and usually, direct competitors of the restaurant itself, for marketing purposes. Where are their privacy concerns here?
Whatever happens, there are a number of steps that the bill has to go through to make it into law. And while this bill would undoubtedly be a small step in creating a more fair and just partnership, third party aggregators won’t readily give up without a good fight.