The tough economics behind restaurant delivery apps in Toronto
What do you want for dinner? If you don't feel like cooking, you can get a meal from nearly any restaurant in the city delivered straight to your door.
“All of sudden everything is deliverable,” says Mark Kupfert, who co-owns popular vegan spot Kupfert & Kim. “Whereas before you’d think I want food delivery and you were limited to pizza.”
UberEATS has about 1,000 restaurant partners in the GTA and foodora has 550. And while these companies give local restaurants access to a broad range of customers, they also take a sizeable chunk off of each order.
“The argument is that these are sales we would have not normally achieved and so it’s worth paying these extra premiums,” says Kupfert about why restaurants tend to sign up with these companies.
Linda Dang, who runs North Poké in Kensington Market, says she signed up for UberEATS and foodora two weeks after opening her restaurant.
“We wanted the extra exposure to new customers seeing that we were a very small start up,” she says. “We definitely don't have the same marketing budget as other restaurants, so this was an easier way to gain new customers.”
On average, she gets about 20 to 30 orders through these services per day, but admits the commission foodora and UberEats takes can get expensive.
“We only make money when we send a restaurant an order,” says foodora’s general manager in Toronto David Albert. He confirms foodora takes roughly 30 per cent off of each order (along with charging a $4.50 delivery fee on the customer end).
With UberEATS, the commission ranges from 25 to 35 per cent, plus customers pay $4.99 for delivery. Customers can also get dinged with $7.49 busy area fee, which general manager Dan Park describes as sort of a surge charge.
On both platforms, this commission rate is flexible. To respond, some restaurants raise their prices—Kupfert and Kim increased its prices by about $1 per item and so did Nom Nom Nom Crepes.
This crepe poutine place, located in Market 707, relies heavily on delivery services in the winter months. “It really helped us, especially since we’re an outdoor market,” says owner Marc Perraut.
Perraut signed up with all of the major delivery players and has a wall of technology filled with iPads from each platform.
And although Perraut admits the commission fees are going up, for him, it’s worth it in the winter, even if it can get a little bit frustrating once he’s busier in the summertime. Ultimately, however, it just makes more sense to stay online for the extra business.
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