Toronto might force food delivery apps to lower fees they charge to restaurants
After seeing a sharp decline in business and having to transition normal operations to delivery and takeout only, many of the city's restaurants are struggling to make ends meet during the pandemic.
Though some residents are doing their best to support their favourite local spots by ordering food for delivery, they may not realize that doing so through major third-party apps, such as UberEats and Foodora, doesn't always equate to enough profits for the restaurant — in fact, it can actually lead to losses.
Always pick up. These food delivery apps rip you and the small business off. https://t.co/nhAdi2GKod— Physicallydistanced (@OldIdiots) April 18, 2020
The fees for such apps are often 25 to as much as 40 per cent of the cut of what an establishment is charging for its food, which is too steep for many independent restaurateaurs to be able to afford handing over to a massive company like Uber.
As one Canadian chef pointed out in a now-viral Instagram video, gross profits for restaurants are usually around 5 per cent of a sale under the best of conditions, let alone amid a global health crisis.
"Most people have seen sales drop to 50 per cent or even less of what they're normally doing," he says in the post. "But even scarier is what happens when you start going into a model with a third-party delivery driver."
With delivery apps taking such a large percentage of every dollar the restaurant makes, gross profits quickly end up in the negatives.
Want to really help small businesses? Here’s some math to better explain why ordering directly from the restaurant helps to keep our staff employed, and gives us a fighting chance to make it through this pandemic. #yegfood #covid19 #shoplocal #savesmallbusiness @workshopeatery @woodshedburgers
Restaurant owners in Toronto are now calling for the City to step in and change the rules surrounding how much these platforms can take per order — something that, according to the Toronto Star, Mayor John Tory is now actively looking into.
"Some of these restaurants told me they are losing money on each order," Tory told the news outlet. "The (restaurants) are in a kind of an emergency situation right now — as we are as a city."
Cities like San Francisco have already placed a temporary cap on delivery app commissions, limiting their cut to 15 per cent of a transaction given the current situation and its strain on small businesses, which are already usually dealing with very slim profit margins.
I didn't know the popular food delivery apps charge the restaurants fees as high as 20-30%, per order. 😱 As if restaurants weren't struggling enough right now. GreedHub.— Cindy (@cindyyc8) April 18, 2020
But while local restaurants wait for Toronto to implement a similar measure, customers can help them out by calling an establishment directly and placing an order for pickup or delivery that way, instead of through an app.
Though it may be an extra step, it's definitely worth it to help out the beloved restaurants that make this city what it is, and that are getting hit the hardest right now.
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