As Diners Flock to Delivery Apps, Restaurants Fear for Their Future

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As Diners Flock to Delivery Apps, Restaurants Fear for Their Future

Before the coronavirus lockdowns, Matt Majesky didn’t take much notice of the fees that Grubhub and Uber Eats charged him every time they processed an order for his restaurant, Pierogi Mountain.

But once the lockdowns began, the apps became essentially the only source of business for the barroom restaurant he ran with a partner, Charlie Greene, in Columbus, Ohio. That was when the fees to the delivery companies turned into the restaurant’s single largest cost — more than what it paid for food or labor.

Pierogi Mountain’s primary delivery company, Grubhub, took more than 40 percent from the average order, Mr. Majesky’s Grubhub statements show. That flipped his restaurant from almost breaking even to plunging deeply into the red. In late April, Pierogi Mountain shut down.

“You have no choice but to sign up, but there is no negotiating,” Mr. Majesky, who has applied for unemployment, said of the delivery apps. “It almost turns into a hostage situation.”

George Constantinou, who owns four restaurants in the New York area and uses DoorDash, Uber Eats and Grubhub, said: “Everyone is trying to help us — our landlord, New York City, our customers. But these companies who are supposed to be our partners take more money than anyone else and try to get us on every charge they can.”

He said a Grubhub employee had recently called one of his restaurants, Bogota Latin Bistro, to check an order. When no one answered the phone, Grubhub canceled all 10 outstanding orders, charged Mr. Constantinou for the meals and their associated fees — and declined to give the restaurant a refund even though some of the orders were already being delivered, according to records and an email exchange with Grubhub shared by Mr. Constantinou.

After being contacted by The Times, Grubhub paid back Mr. Constantinou for the charges from that night and more recent instances when the same thing happened. The company did not have a comment beyond saying it had fixed the issues.

In early April, Uber Eats cut the fees that restaurants pay if they don’t use its drivers. It also set up a program to allow diners to contribute to restaurants. In the program’s first two months, it generated an average of $37 for each restaurant, according to Uber’s figures.

DoorDash, which does most of its delivery business with big restaurant chains, said in April that it would cut its primary fees in half for all independent restaurants until the crisis passed.

All the delivery services are now facing anger from smaller restaurants for giving priority in their apps to chain restaurants because of the volume the chains can bring, even though the chains generally pay the apps lower fees, according to restaurant consultants. In the apps, the chains often appear at the top of the list of restaurants in any area — unless smaller restaurants pay additional fees to bolster their placement.

“They take care of their corporate partners first and then use us for advertising to try to create good will,” said Scott Weiner, the head of the Fifty/50 Restaurant Group, which owns 20 restaurants in Chicago.

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