How the restaurant delivery business holds up with personal food returns


OAKLAND, California – Last fall, as the weather cooled and coronavirus cases increased, May Seto, the owner of Grand Lake Kitchen in Oakland, renovated a used pizza oven and started a takeaway and delivery pizza shop from an additional kitchen in who had cooked them for catering and private events.

Today, one of Grand Lake’s two locations serves as a hub for couriers picking up the restaurant‘s cafe dishes and pizzas. Ms. Seto also plans to remodel the entrance at her other location to make room for the droves of delivery drivers picking up groceries.

“We could redesign the front of the restaurant a little and keep an eye on the delivery as if it were staying here because it is,” she said.

Delivery services like DoorDash and Uber Eats became a lifeline for businesses during the pandemic. Restaurants learned the logistics of handling them – rearranging kitchens and stocking takeaway containers in abandoned dining rooms – and reluctantly accepted delivery charges that hurt their already thin profit margins.

Some of these changes appear to be permanent as consumers persist in their newfound fondness for having food delivered to their doorsteps. In a recent survey by JD Power and Associates, 71 percent of consumers said they would continue to order as many or more deliveries as they did during the pandemic.

In markets that reopened earlier than most other places, such as Florida and Texas as well as Australia, DoorDash said its order volume has decreased about 20 percent from the peak of the pandemic. Uber Eats also had slumps when the communities reopened, but sales still soared 230 percent a year in the first quarter of this year – a welcome change from Uber’s slumped transportation business.

Something similar happens in places like San Francisco. When the bulk orders subsided this spring, Laurie Thomas, the co-owner of two restaurants in town, said the deliveries were turned down. But when San Francisco reopened more fully in June, Ms. Thomas’ DoorDash orders rose again and were only marginally lower than during the pandemic.

“Delivery became a huge part of life during the pandemic,” said Ben Bleiman, head of the San Francisco Bar Owner Alliance. “The question is how much of it will be left and how much will be left over.”

There is no question that the pandemic has been a boon to online delivery services. In the first quarter of the year, DoorDash processed 329 million orders, a quarterly record for the company and a year-over-year increase of 219 percent, it said. DoorDash estimates it will process $ 9.4 billion to $ 9.9 billion in orders in the second quarter of the year, after processing $ 9.9 billion in the first quarter.

When delivery stops, restaurant groups push to deal financially. Ms. Thomas heads the Golden Gate Restaurant Association, an industry group that has campaigned to limit the fees charged by delivery companies while allowing them to charge additional fees for marketing services. At the start of the pandemic, many cities capped the fees restaurant delivery companies might charge for emergencies. But many of these orders are running out. When fees return to prepandemic levels, delivery will become prohibitive, business owners said.

Last week, the San Francisco board of directors unanimously voted for a permanent cap on delivery charges of 15 percent. Similar measures are being considered in Chicago and other cities.

“We cannot have a system where people are billed more than 30 percent of their sales to survive,” said Ahsha Safai, a board member who helped fund the legislation.

DoorDash and Uber Eats responded to the emergency caps by revising the way restaurants pay for their services and increasing local fees. In April, DoorDash gave restaurants the option to pay a 15 percent fee for basic services and the option to pay higher fees for marketing and other services. In some cities, such as Chicago, DoorDash charges customers a “Chicago Fee” of $ 1.50. In Jersey City, which temporarily capped fees at 10 percent, Uber Eats added a “temporary local fee” of $ 3.

Christopher Payne, the president of DoorDash, said there are other ways lawmakers could support restaurants, such as:

“Most restaurants want to pick up their customers where they want to be,” said Payne. “The reality is that customers want both opportunities. They want to go to the restaurants and have the great experience that they miss, but they also want to get what they want at home. “

Even high-end restaurants that became a lifeline to take away during the pandemic said they could keep it as an addition to upscale dining.

“There is currently excitement about the return to personal dining, but we strongly believe that the long-term health of restaurants and other service businesses requires creativity and a variety of revenue streams,” said Nick Kokonas, co-owner of Alinea, a Chicago restaurant that Offers fine dining experiences that can range from $ 210 to $ 415 per person.

During the pandemic, Alinea began offering to-go options for $ 35 per person, and Mr Kokonas, who is also the CEO of restaurant software company Tock, said Alinea would expand its to-go offerings.

Genie Kwon and Tim Flores opened their Filipino cafe and bakery Kasama in Chicago last July. The delivery wasn’t part of their original vision for the restaurant, but the pandemic changed their plans. They piled their bar with takeaway containers and their dining room was full of couriers and customers picking up orders.

Ms. Kwon said she made a habit of allowing new menu items to sit for an hour before testing so that she could be sure they would still taste good after they were delivered. As coronavirus cases spiked over the winter, she and Mr Flores discussed adding a special window for couriers to pick up groceries as a social distancing measure. During storms, Ms. Kwon said, there were often not enough couriers to deliver orders, so she and Mr. Flores ended up doing the deliveries themselves.

Ms. Kwon said she hopes to reduce Kasama’s reliance on delivery, which she believes was 25 percent of her business during the pandemic, and to phase it out over the next month or so to make room for personal dining.

“At this point, we don’t have the space or the staff to keep up with the volume of deliveries we’re making,” she said. “We’ll probably leave the day as it is and then stop delivering for dinner.”

To make sure customers stay with them, DoorDash and Uber Eats have rapidly expanded their delivery offerings. In addition to hot meals, companies are now shipping groceries, pet supplies, alcohol and dry goods, and are urging customers to add the new specials to their shopping carts when ordering dinner.

“Many of the Uber Eats users who used the app primarily to order food are now moving and staying in other areas of the business,” said Pierre-Dimitri Gore-Coty, senior vice president of delivery at Uber.

DoorDash’s Mr Payne said, “One of the persistent trends has been that when they are more comfortable, consumer expectations will rise, not fall.”

He added, “The desire for greater convenience and faster delivery of things only seems to be one-way.”


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