SAN FRANCISCO — Every morning, Turtle Brennen, a research engineer who lives here in the Mission District, buys a coffee from Ritual Roasters, a locally based coffee chain. Since the stay-at-home order, he’s also been getting a pastry so he can support the bakeries it works with. He calls restaurants and picks up his food directly, and he still buys books from Borderlands – the same local bookstore he’s been visiting regularly for more than 20 years.
“It is incredibly difficult not to go to Amazon when you need to buy something kind of esoteric,” Brennen said. “I’ve been making a conscious effort to search out alternatives.”
Brennan’s efforts are being reflected across the Bay Area, as consumers here grapple with a pandemic that is heightening an already complicated relationship with the technology industry. To help local businesses, many of which are on the edge of going under, some people here are going out of their way to call restaurants instead of using fee-charging delivery apps. They’re hiring gig workers directly, finding local businesses selling things they usually get on Amazon and cutting out the tech middlemen whenever possible.
The Bay Area is home to many of the very start-ups they’re trying to circumvent, including Uber, DoorDash and Instacart, which have created new ways to order and deliver food and goods. Billions of dollars of funding have been poured into tech companies of all kinds in the area, fueling one of the most expensive housing markets in the country. It’s also prompted a backlash, as the city that was once known for hippies and Burning Man attendees transformed into the heart of the capitalism-driven tech world.
These apps have proved hugely useful to many restaurants suddenly unable to host diners and switching to delivery models, as well as laid-off workers desperate for work. For companies, the apps make it easier to reach a wide audience and conduct online sales despite the pandemic, and put a staff of delivery workers at their fingertips instantly. But the convenience comes at a cost.
Diners and restaurants owners from across the country have become more aware of the issue during the crisis. Giuseppe Badalamenti, owner of Chicago Pizza Boss and a restaurant consultant, posted a receipt from another restaurant he was working with that showed seemingly exorbitant fees from Chicago-based Grubhub. What started as $1,042.63 in food sales was reduced to $376.54 after Grubhub fees for delivery, commission, processing and promotions. Grubhub said that restaurants choose what services they add on and that the invoice was an extreme outlier.
“When you take away the diners all you’re left with is this predatory, venture capital, third-party app as all of your business,” said Badalamenti. “Thirty percent on the very extreme end barely pays for your food. You still have to keep the lights on, still have to pay for the labor.”
Controversy over the gig economy’s business models, which provide workers few protections and typically collect 15% to 30% in fees as the middleman, have prompted soul searching by consumers and actions by local governments around the country.
San Francisco, Seattle and the District have all passed a 15% cap on app delivery fees to help struggling restaurants, and other cities, such as Boston, are weighing similar measures. And customers are increasingly circumventing apps when possible.
To help address the concerns, many delivery companies are temporarily changing their fees or offering extra help to companies and workers. DoorDash and its subsidiary, Caviar, are cutting restaurant commission fees 50% through the end of May, and Grubhub announced it would defer up to $100 million in commissions for restaurants, but not waive or decrease them. Uber Eats is waiving commissions on pickup orders and delivery fees for consumers buying from independently owned restaurants.
The companies, which have seen an increase in their delivery business over the last two months, have also defended their fees. They say they’re necessary to run the services and pay drivers, and that they are helping restaurants while business shifts to delivery and takeout.
“Reducing the commissions that fund our marketplace – particularly during these unprecedented times – would force us to radically alter the way we do business in a way that could ultimately hurt those that we’re trying to help the most: customers, small businesses and delivery people,” Uber Eats spokesperson Meghan Casserly said in a statement.