A food delivery driver using a bike delivers food to a woman in Vancouver, on Sunday, April 26, 2020. THE CANADIAN PRESS/Darryl Dyck

A food delivery driver using a bike delivers food to a woman in Vancouver, on Sunday, April 26, 2020. THE CANADIAN PRESS/Darryl Dyck

Local restaurants feel squeezed by delivery apps’ commission fees

Delivery platforms can take up to 30 per cent commission

Restaurants struggling to survive during the COVID-19 crisis have turned to take-out and delivery, but the fees charged by food-delivery companies are eating away their bottom line, some operators say.

Physical distancing measures have decimated dine-in service, which accounts for most industry revenue, said Mark von Schellwitz, a vice-president of the non-profit Restaurants Canada.

Margins are typically less than five per cent at the best of times, he said, and delivery platforms can take up to 30 per cent commission.

Companies including Uber Eats, DoorDash and SkipTheDishes say they’re offering restaurants various supports and the opportunity to keep serving customers, while maintaining their own operations.

“We think they need to sharpen their pencils to reduce the fees … or an increasing number of members will be asking us to implement some sort of a fee cap,” said von Schellwitz, pointing to the temporary 15 per cent cap on commissions established in San Francisco this month.

Terrence Feng owns and operates Kin Kao, a Thai restaurant along Vancouver’s Commercial Drive that previously generated about 15 per cent of its revenue with take-out and 10 to 12 per cent through delivery.

Now, delivery accounts for 50 to 60 per cent and the rest is take-out, said Feng.

“We were basically at break even, if we’re lucky, given the current commission rates.”

READ MORE: Plan in the works for safe re-opening of B.C. restaurants amid COVID-19: BCRFA

Feng said profits have improved in the last couple of weeks because DoorDash cut its commission fees in half for local restaurants on April 13. The commission rate can vary by restaurant, and Feng said Kin Kao now pays 14 per cent.

DoorDash said its investment of up to $100 million to cut the fees will continue through the end of May.

Kin Kao is still paying 28 per cent commission on sales through Uber Eats, said Feng.

Uber said in a statement that it’s supporting restaurants in a sustainable manner by waiving delivery fees for customers, thereby generating more orders. It said commission fees help cover operating costs and to reduce them would make it difficult to maintain a safe and reliable platform.

Both Uber and DoorDash are also waiving commission fees for orders placed through the app that are picked up in person.

Gino Herring, the general manager of Vancouver Italian restaurant Sprezzatura, said they had never used food delivery platforms before the pandemic, but quickly adopted Uber Eats, DoorDash and SkipTheDishes.

Dine-in service accounted for 90 per cent of the restaurant’s revenue, said Herring, and now it’s about 80 per cent from delivery.

Although he’s pleased with sales, Herring said the companies’ fees are “aggressive” and local restaurants aren’t in a position to negotiate.

“It’s a bit predatory, but we operate at the behest of those apps,” he said.

SkipTheDishes is Canada’s largest food delivery network, headquartered in Winnipeg. CEO Kevin Edwards said the company has a vested interest in ensuring its vendors make it through the pandemic.

“It certainly doesn’t do Skip any good to have any restaurants struggling,” he said.

The company initially offered restaurants a 15 per cent rebate on commissions before increasing the rebate to 25 per cent through the end of May. It’s also offering reduced fees for restaurants that use their own delivery staff when an order is made through its app.

Edwards said his company will think about how it can enhance its support for local vendors, but he’s not sure what form it would take, and the company also has to ensure its own viability.

“Our net revenue is not nearly what people believe it to be and taking 25 per cent and applying it to a rebate obviously changes that,” he said.

Foodora announced Monday that it’s closing Canadian operations next month, saying Canada is a highly saturated market for online food delivery and the company was unable to reach a level of profitability sustainable enough to continue operations.

READ MORE: Canada’s re-opening will be ‘guided by science’, normal life still a long way off: feds

Feng said local restaurants that don’t have any other way to get food to customers are “handcuffed” to the delivery apps, while struggling to turn a profit during the pandemic.

“If everybody stood up in the industry and said, ‘You know what, that’s too much’ … then I think they’d be way more willing to play ball. But when they know that 95 per cent of their clients can’t do anything about it, they can flex their muscle a little big more, right?”

Edmonton chef Paul Shufelt avoided delivery apps when he opened The Workshop Eatery, opting for an in-house delivery system instead.

In early April, Shufelt posted a video on Facebook breaking down the costs of running a restaurant and how commission fees can affect the bottom line. It’s since garnered more than 586,000 views and Shufelt said he’s heard from hundreds of restaurant operators who are struggling with the fees.

Shufelt said for many restaurants, reliance on delivery is likely here to stay, even after physical distancing restrictions are loosened.

“I think that’s going to make things really hard for restaurant owners who already barely make enough to keep the doors open.”

Brenna Owen, The Canadian Press


Like us on Facebook and follow us on Twitter.

CoronavirusRestaurants

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Construction is expected to start in March of 2021 on 23 new rental homes funded by the provincial government’s Community Housing Fund. (Metro Creative photo)
Province announces rental home project in Chilliwack paid for by Community Housing Fund

Twenty three homes for Indigenous families are planned in partnership with Tzeachten First Nation

Canadian Red Cross staff engaged in a Personal Protective Equipment (PPE) and social distancing training exercise. (Luc Alary / Canadian Red Cross)
Red Cross canvassers following PHO guidelines while going door-to-door

Canvassers using safety protocols including masks and distancing to continue organization’s efforts

Chilliwack-Hope MP Mark Strahl, pictured here in 2017, has harsh words about the federal government’s Fall Economic Statement. (Black Press file)
Chilliwack MP Mark Strahl says Liberal government is leaving millions of Canadians behind

Strahl delivered a blistering critique of the federal government’s Fall Economic Statement

Phyllis Stenson, a mainstay of the local arts scene and the Harrison Festival of the Arts, passed away earlier this month. Stenson was crucial in setting up the foundation for relationships, funding and more that continue even now to echo well past her retirement in 2013. (Contributed Photo/Harrison Festival Society)
Harrison Festival, Fraser Valley arts icon Phyllis Stenson mourned

Stenson passed away in late November, leaving lasting legacy of passion for the arts behind

Elkhart Gas Station, located on Highway 97C about 60 kilometres west of Peachland, opened in November 2020. (Google maps)
The Okanagan Connector now has a gas station

The highway previously ran for over 117 kilometres without a place to fuel up

Provincial health officer Dr. Bonnie Henry updates B.C.’s coronavirus situation at the legislature, Nov. 30, 2020. (B.C. government)
Hockey team brought COVID-19 back from Alberta, B.C. doctor says

Dr. Bonnie Henry pleads for out-of-province travel to stop

B.C. Premier John Horgan on a conference call with religious leaders from his B.C. legislature office, Nov. 18, 2020, informing them in-person church services are off until further notice. (B.C. government)
B.C. tourism relief coming soon, Premier John Horgan says

Industry leaders to report on their urgent needs next week

An RCMP cruiser looks on as a military search and rescue helicopter winds down near Bridesville, B.C. Tuesday, Dec. 1. Photo courtesy of RCMP Cpl. Jesse O’Donaghey
B.C. Mountie, suspect airlifted by Canadian Armed Forces from ravine after foot chase

Military aircraft were dispatched from Comox, B.C., say RCMP

Photo by Dale Klippenstein
Suspect tries to thwart police in Abbotsford with false 911 call about men with guns

Man twice sped away from officers and then tried to throw them off his trail

An 18-year old male southern resident killer whale, J34, is stranded near Sechelt in 2016. A postmortem examination suggests he died from trauma consistent with a vessel strike. (Photo supplied by Paul Cottrell, Fisheries and Oceans Canada)
“We can do better” — humans the leading cause of orca deaths: study

B.C. research reveals multitude of human and environmental threats affecting killer whales

A logo for Netflix on a remote control is seen in Portland, Ore.,Aug. 13, 2020. Experts in taxation and media say a plan announced Monday by the government will ultimately add to the cost of digital services and goods sold by foreign companies. THE CANADIAN PRESS/AP-Jenny Kane
‘Netflix tax’ for digital media likely to raise prices for consumers, experts say

The government says Canadian companies already collect those taxes when they make digital sales

Most Read