Food delivery apps are impacting your favorite restaurants, taking bite out of profits

… The convenience of summoning prepared food to your doorstep with the click of a button is causing the online delivery industry to expand at a dizzying rate. More than 78 million people use some sort of online delivery service in the U.S., with revenue well into the billions this year. Unsurprisingly, nearly half of these customers were millennials. 

… But this convenience comes at a cost, both to the consumers, who pay delivery and service fees, as well as to restaurants, who are finding the services to be a double-edged sword. While the apps can increase sales, they also cut into already razor-thin profit margins

…When Grubhub started offering delivery as well as ordering, he switched over to using their drivers. He estimates that the fees charged by Grubhub are about half the cost of employing his own.

O’Sullivan opts to receive an email from Grubhub every time an order is placed. He recognizes a lot of the names of his customers, and said the demographics now vary and include families — “not just guys playing video games” — as well as businesses and pharmaceutical reps who use it for catering.

He also added Uber Eats when it launched, but Grubhub still represents the vast majority of his deliveries. O’Sullivan estimates the restaurant receives 350 to 400 delivery orders per week, and the numbers are even higher in inclement weather.


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