A couple of days ago, the NYT featured a story about the ethics of using delivery services like Uber Eats and DoorDash (See: As Diners Flock to Delivery Apps, Restaurants Fear for Their Future). The basic gist of the story is that these services are predatory, in that they insist on such a large cut of the overall order price that, in some instances, the restaurant in question doesn’t make a dime on the order.
Just how big a cut do the delivery services take? Generally around 30%. (That’s true except where limited by law. In Jersey City, for example, delivery fees are limited to 10%.) So, in most places, if you order $100 worth of food, the restaurant only gets $70. In an industry where profit margins are often in the single-digit range, it’s easy to wonder how that’s remotely attractive, let alone sustainable.
And where does that leave you as a consumer? Suppose you’re someone living in a city where all the restaurants are closed except for pickup and delivery. And further suppose that you are someone who loves restaurant food, and who also wants to help their favourite restaurants survive. What are you to do?
The answer clearly depends on some details, here, and I’m no expert on this particular industry. Indeed, beyond having read Kitchen Confidential and spending too much on restaurant food myself, the industry is a bit of a mystery to me. So I spoke to a friend who is general manager for a small chain of 3 restaurants here in Toronto. I asked him why he dealt with food delivery services at all, given the bad rap those services get, and whether I should feel bad about ordering food that way. The conversation was pretty enlightening.
My friend confirmed that most food delivery services take a 30% share of the bill. How can that make sense? Why would a restaurant accept these deliveries demanding such a greedy share of the pie?
Here’s the explanation. He told me that way back in pre-Covid times, restaurants had a couple of different reasons for accepting the harsh terms offered by the delivery services. First, there’s marketing. Every Uber Eats and DoorDash order represents not just an order, but a potential new customer — one who might not previously have known about the restaurant, and who might just come to the restaurant in person next time, and then the restaurant gets full benefit.
Second, when you’ve already paid your rent and paid your staff to be on duty, an Uber Eats sale is an ‘incremental’ sale: if overhead is already paid, then fulfilling an Uber Eats order on top of that is kind of painless. “At the margin” (as economists say) an extra meal costs very little to produce, so even Uber Eats’s 30% leaves a healthy profit.
Now, fast forward to the Covid-19 pandemic: with restaurant doors shut, neither of the factors listed above would generally matter much. You can’t use DoorDash as a marketing ploy, because (here in Toronto at least) your doors are closed to that more lucrative in-restaurant dining. And if you’re not operating at full capacity, you may not necessarily have the capacity to treat a DoorDash order as a relatively easy addition to the kitchen’s duties. But today, in Canada at least, there are substantial government subsidies that keep cost of staffing manageable, so at least some restaurants are able to keep more staff available to fulfill delivery (and curb-side pickup) orders. And as of now, those orders (in places like Toronto, where restaurants are definitely closed to walk-in business), Uber Eats at the like are a lifeline.
Bottom line: if you have qualms about Uber Eats (etc.) it shouldn’t be because you think the restaurant is suffering. Uber Eats, DoorDash, and the like are helping, not hurting, your favourite restaurant.
Now, a major ethical question remains. In spite of what I’ve said above, the question remains whether services like Uber Eats and DoorDash are a good thing? After all, they charge restaurants very high fees, and restaurants are likely signing up for fear of being left out and jostled aside by the competition. And (though views vary) they arguably underpay their delivery drivers. And yet — interestingly — the services themselves still aren’t profitable. And while consumers benefit from the relative convenience of being able to enjoy restaurant-quality food at home, they’re also ultimately going to eat at least part of the increase in prices that will naturally go along with these companies having inserted themselves into the restaurant ‘value chain.’ (You surely didn’t think consumers wouldn’t end up footing the bill, directly or indirectly, did you?) So it’s tough, overall, to judge the coming of DoorDash and Uber Eats as a good thing. Yes, some form of delivery would be really great, if a model could be figured out that benefits everyone, but these organizations haven’t figured out how to do that yet.
The problem here is really a classic collective action problem. Because even if none of us is happy about the advent of these delivery services, in their present form, each of us benefits from the convenience they provide. And the same dilemma applies to the restaurants using these services. A given restaurant manager can regret what these companies are doing to the industry, but at the same time see dealing with them as good for her restaurant, in the here and now. And because of that pattern of incentives, everybody is motivated to keep participating in a system that they think is, on balance, a bad one. It’s a pernicious kind of problem.
What alternatives are there? Can a consumer do better by their favourite restaurant than to order via Uber Eats? There are a couple of alternatives. In some places, smaller, more equitably-minded delivery services have popped up, in some cases supported by municipal governments. And some restaurants are doing their own deliveries, though there are barriers to that becoming very common, not least among them the cost of hiring and insuring drivers.
So, what’s the result, from the perspective of ethical consumerism? If you think the model is regrettable, and don’t want to participate in it, then go ahead and avoid it. It’s perfectly reasonable to stand on principle, and some will say it’s even ethically required. But if your main ethical worry has to do with the fortunes of your favourite restaurant, and the people it employs, then it’s worth knowing that you’re helping them more by ordering via Uber Eats and DoorDash than by not ordering.