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

An aerial shot of Cedar Valley Lodge this past August, LNG Canada’s newest accommodation for workers. This is where several employees are isolating after a COVID-19 outbreak was declared last Thursday (Nov. 19). (Photo courtesy of LNG Canada)
Forty-one positive COVID-19 cases associated with the LNG Canada site outbreak

Thirty-four of the 41 cases remain active, according to Northern Health

Maria Lewis president of the Prince Rupert Royal Canadian Legion accepts a $5,000 donation gifted via an artillery shell from Shawn MacDonald governor of the Prince Rupert Loyal Order of the Moose 1051 on Nov. 13.
Major donation overwhelms Prince Rupert Legion

Prince Rupert Moose Lodge 1051 donates $5,000 to local veterans organization

Air Canada /Jazz flight AC8280 on Nov. 16 from Vancouver to Prince Rupert had a confirmed case of COVID-19, said Air Canada on Nov. 20. (File photo)
Flight into city had confirmed case of COVID-19

Nov. 16 flight from Vancouver to Prince Rupert affected by coronavirus

Prince Rupert carving artist Henry Kelly is having his work installed on Nov. 20, as a permanent art exhibit at the Prince Rupert Regional Airport. The traditional cedar canoe is a welcome symbol to those arriving at YPR. (Photo: supplied)
Art unveiling ceremonies at YPR cancelled due to new pandemic restrictions

Coast Tsimshian Cultural Exhibit at Prince Rupert Regional Airport features local carvers

People wearing face masks to help curb the spread of COVID-19 cross a street in downtown Vancouver, on Sunday, November 22, 2020. The use of masks is mandatory in indoor public and retail spaces in the province. THE CANADIAN PRESS/Darryl Dyck
B.C. reports 17 COVID deaths, 1,933 new cases as hospitalizations surge over the weekend

There are 277 people in hospital, of whom 59 are in ICU or critical care

Workers arrive at the Lynn Valley Care Centre seniors home, in North Vancouver, B.C., on Saturday, March 14, 2020. It was the site of Canada’s first COVID-19 outbreak in a long-term care facility. THE CANADIAN PRESS/Darryl Dyck
Rapid tests ‘not a panacea’ for care homes, Dr. Bonnie Henry says

B.C. lacks capacity for daily tests of thousands of workers

(Delta Police Department photo)
Cannabis edibles found in Halloween bag lead B.C. police to illegal lab

Delta police arrested a man and a woman while executing a warrant at a residential property Nov. 20

A woman being arrested at a Kelowna Value Village after refusing to wear a mask on Nov. 22.(@Jules50278750/Twitter)
VIDEO: Woman arrested for refusing to wear mask at Kelowna Value Village

RCMP claims the woman was uncooperative with officers, striking them a number of times and screaming

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

B.C. Liberal MLA Shirley Bond questions NDP government ministers in the B.C. legislature, Feb. 19, 2020. (Hansard TV)
Cabinet veteran Shirley Bond chosen interim leader of B.C. Liberals

28-member opposition prepares for December legislature session

Motorists wait to enter a Fraser Health COVID-19 testing facility, in Surrey, B.C., on Monday, November 9, 2020. THE CANADIAN PRESS/Darryl Dyck
COVID-19: What do rising positivity rates mean for B.C.? It’s not entirely clear

Coronavirus cases are on the rise but the province has not unveiled clear thresholds for further measures

A rider carves a path on Yanks Peak Saturday, Nov. 21. Two men from Prince George went missing on the mountain the next day. One of them, Colin Jalbert, made it back after digging out his sled from four feet under the snow. The other, Mike Harbak, is still missing. Local search and rescue teams went out looking Monday, Nov. 23. (Sam Fait Photo)
‘I could still be the one out there’: Snowmobiler rescued, 1 missing on northern B.C. mountain

As Quesnel search and rescue teams search for the remaining rider, Colin Jalbert is resting at home

More than 70 anglers participated in the bar-fishing demonstration fishery on Sept. 9, 2020 on the Fraser River near Chilliwack. DFO officers ticketed six people and seized four rods. A court date is set for Dec. 1, 2020. (Jennifer Feinberg/ Chilliwack Progress file)
Anglers ticketed in Fraser River demonstration fishery heading to court

Sportfishing groups started a GoFundMe with almost $20K so far for legal defence of six anglers

Most Read