Grubhub and DoorDash are encountering complaints from restaurants as a result of high fees for services.  Upstarts including Lunch Box, Traiilo, and Bento Box have benefitted from sharp increases in requests for services as a result of numerous independent restaurants rejecting traditional providers.  Pre-COVID, expenses charged to restaurants could add 30 percent to a tab. Following limits placed by the New York City Council on delivery services, costs are now split between the restaurant with a cap of 20 percent in addition to a customer delivery fee of 15 percent.

The traditional delivery services maintain that they provide a comprehensive service linking restaurants to customers managing food delivery. Grubhub Senior Vice President Kevin Kerns noted “Grubhub supports restaurants so they can be more successful.”

To approach profitability for delivery services, companies are charging consumers higher delivery charges thereby limiting patronage of restaurants and replacing delivery services with online ordering and pick-up.  The ordering services provided by Grubhub and DoorDash are now being duplicated by individual restaurants, but the challenge is to persuade customers not to use third parties but to order directly from kitchens.

Given the financial reports from third party delivery companies, it is apparent that despite increased sales during the COVID period, profitability is an unattainable target.  As the economy opens and diners return to their favorite restaurants, third party services will experience a further decline in demand.