How Third Party Apps Are Killing the Restaurant Industry

The restaurant industry has been hit particularly hard over the past two years by the pandemic and other resulting problems. But even before the pandemic hit, restaurants were dealing with another problem: third party apps that were slowly decimating their bottom line.

Let’s look at what these apps do and how they’ve been taking advantage of the local restaurant industry. But stay tuned to the end, where we will discuss an alternative solution that is ready to help.

How Do Third Party Apps Work?

Third party delivery and ordering apps including DoorDash, GrubHub, and UberEats, serve to connect restaurants with customers. When restaurants sign up for these apps, they can post their menu, which allows customers to go into the app and order food.

Once the order is placed, the restaurant receives the order and prepares it. Then, a delivery person, as a subcontractor for the third party company, picks up the order and brings it to the customer.

All payments are processed through the app and restaurants also receive payment and invoice from the company who created the app.

How Third Party Apps Have Been Slowly Crippling the Restaurant Industry

At first, third party apps seemed like a genius idea — after all, it was a way to increase sales without sacrificing prime, in-restaurant seating and didn’t require restaurants to invest in their own delivery person.

Sounds like a perfect, symbiotic relationship, right?

So what’s the catch?

While these delivery apps marketed themselves as the savior of local restaurants, the facts tell another story. The commissions that these apps charge for using their platform generally falls between 20-30%, which does not include delivery costs or processing fees. These large fees quickly eat into local restaurants’ bottom lines and sometimes result in them losing money on every in-app purchase.

As restaurants continue to use these food delivery apps, we’ve seen more and more heartbreaking stories emerge.

These stories included posts on social media with restaurant owners and delivery people posting pictures of their profits and exactly how much these delivery apps were charging them for their services.

Consider the example of Giuseppe Badalamenti, a restaurant owner in Illinois. According to his Facebook post, of the $1,042.63 that he sold on GrubHub in one month, his restaurant only made $376.54! Where did the rest of it go? It was eaten up by commissions and fees charged by GrubHub. Mind you, the delivery people — the ones who actually paid for their own gas and time to pick up and deliver the food — only made around $95 in their collective delivery commissions. The majority simply went to GrubHub for the use of their technology.

And it gets worse.

Back in 2019, it was discovered that GrubHub was buying up restaurant website domains. In some cases, they were even creating whole restaurant websites that looked legit but, in fact, linked to GrubHub’s services. This made it that much more difficult for local restaurants to purchase a domain and set up their own websites with their own online ordering services.

Some past executives have even revealed that GrubHub would set up phone numbers on these fake websites that, when called, would redirect to the restaurant. But this would allow GrubHub to charge a commission fee for every call that they rerouted.

Of course, GrubHub has recently reported that they will stop charging restaurants for rerouting phone calls from their app and other sites. While this is good news, it has left many with a feeling of “too little too late.” And rightfully so.

It’s no wonder that these apps are being labeled as predatory businesses — stealing from hardworking, local businesses in order to line their own pockets.

DevourNow: A Third Party App Solution That Is Different

But this doesn’t have to be the end of the story.

There are other apps out there that are different. These apps want to change the industry and actually partner with local restaurants to make it easier for them to access new customers, receive more orders, and make more money.

And DevourNow is one such app.

DevourNow is a new solution that helps to connect restaurants with their customers without taking advantage of their bottom line.

But How Is DevourNow Different?

DevourNow has a very transparent business model, laying out all their fees, with no hidden costs. It is more about partnering with local restaurants to give them the exact services they want without extra, hidden charges that other third party apps use.

Here are the basic rates for restaurants that partner with DevourNow for delivery:

4% for direct partner delivery
5% to become a linked partner
7% to become a listed partner

Each of these levels includes its own unique perks that are designed to boost a restaurant’s bottom line on their own terms.

If you would like to learn more or discuss the possibility of partnering with DevourNow, check out our website here.

Concluding Thoughts on Third Party Apps and the Restaurant Industry

The past few years have been admittedly bleak for local restauranteurs. But there is a light at the end of the tunnel. As more technologies step forward to meet the need for fairer online ordering practices, local restaurants are not in the predicament they once were.

With DevourNow and other similar services, restaurants have the opportunity to thrive and build lasting, mutually beneficial partnerships.