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The Spoon

Daily news and analysis about the food tech revolution

Uber Eats

Third-Party Delivery Suspends Services to Comply With Curfews

Minneapolis, Los Angeles, Nashville, Philly, Atlanta . . . the list of cities under curfew goes on, and if you live in one of those places and were counting on some food delivery for your supper, you’ll have to look elsewhere. DoorDash recently told The Verge it is “pausing” operations to comply with those local curfew orders. 

From The Verge:

DoorDash, which has seen an increase in orders as restaurants have been forced to suspend eat-in dining during the pandemic, told The Verge it is pausing operations to abide by curfews. Its spokesperson did not provide details about which cities were affected as of Monday.

Uber has also suspended service in some cities, which extends to its Eats food delivery business. An Uber spokesperson told Business Insider that customers should use the app to learn more about these suspensions, and that they should use Uber/Uber Eats “for emergency purposes only during this time.”

Postmates, which is the biggest service in Los Angeles, is also abiding by local curfews. Grubhub said it is “pausing operations when needed.”

Delivery companies aren’t being specific about which cities have suspended which services. Even in places where an order goes through, they are then cancelling orders. For ones that actually go through, some drivers are having trouble actually getting the food to customers:

How long these suspensions and changes to service last will, most likely depend on when the unrest subsides. To find out if food delivery is a realistic prospect in your city, best to check for updates directly in these services’ apps.

Amazon Launches a Restaurant Food Delivery Service in India

Amazon today announced the launch of its own restaurant food delivery service in India, according to TechCrunch. Dubbed Amazon Food, the service launched in select postal index codes of Bangalore before expanding to other cities in the future.

“Customers have been telling us for some time that they would like to order prepared meals on Amazon in addition to shopping for all other essentials,” an Amazon spokesperson said. The company will launch with a handful of restaurant and ghost kitchen partners from which customers can order meals.

Amazon’s starting a food delivery service in India was actually meant to happen in 2019 but got pushed to March of this year, just as the COVID-19 pandemic started to take the entire world in its grip. India’s nationwide stay-at-home order further delayed the Amazon Food service’s debut until now.

Amazon Food arrives in India at a time of upheaval for food delivery in that country. Uber Eats recently exited the Indian market, selling its business in that country to local delivery service Zomato for $206 million. But Zomato, along with its chief rival Swiggy, are currently struggling under the negative impact the pandemic has had on India. Both companies have cut jobs, and Swiggy is also scaling back its ghost kitchen division as a way to cut more costs and keep its operations “nimble.”

Amazon’s entry into the market could exasperate the challenges these local players already face. Even without a pandemic keeping India’s 1.3 billion people on lockdown, neither Swiggy nor Zomato is profitable yet — a common theme for third-party food delivery companies worldwide.

Amazon, meanwhile, has invested heavily into the Indian market and already operates Amazon Fresh and Amazon PrimeNow platforms in that country.  

DoorDash Will Use Location Data to Make Pickup Orders Speedier and More Socially Distanced

DoorDash announced a new feature today that’s meant to speed up the process for pickup orders and make it more appropriate for these socially distanced times. One catch: the new feature needs your location data in order to do that.

Customers can opt in and share their location data with the DoorDash app, so that as they approach the restaurant, that restaurant can receive an alert and have their order ready to go. The idea is to cut down on the amount of people crowding into a restaurant lobby as they wait for their takeout orders to be ready. In theory, at least, a restaurant could have a designated area of the lobby for pickup orders and place the food there when the app notifies them of a customer’s arrival. 

Of course in order for that to work, people have to be okay with DoorDash having access to their location data while the app is running. I doubt this will be an issue for most customers, given the times. Recent survey data sent to The Spoon by Dragontail found that 73 percent of consumers getting takeout/delivery said they would be “more inclined to order for carry out over delivery if given the option for a contactless experience.” 

The new feature is also a way for DoorDash to originate more takeout orders through its own platform. Third-party delivery has taken much heat (understatement) lately over the amount they charge restaurants in commission fees for delivery orders. More than ever, customers are encouraged to order takeout directly from the restaurant itself so that the revenue from each transaction goes directly to businesses, which need all the help they can get right now. The idea of ordering takeout direct from local restaurants has even been translated into a weekly event on social media.

DoorDash is clearly trying to grab back some of the orders from takeout, and it wouldn’t be alone. At the end of last week, Postmates launched a curbside pickup feature. Grubhub has had a feature for pickup orders in place for some time, too.

Nor is sharing one’s location to make food pickup more efficient just the territory of third-party delivery services. My colleague Chris Albrecht highlighted its benefits in the grocery sector this week when he wrote about his experience with Walmart’s geofencing technology that enables contactless curbside pickup. Geofencing, and location data in general, will “take on more importance as restaurants and grocers look to efficiently maximize their revenues while reducing human-to-human contact.” 

Back in the restaurant world, DoorDash still leads in terms of market share for third-party delivery companies, according to the latest numbers from Edison Trends. That number one spot could be upset, though, if the rumored Grubhub-Uber Eats deal goes through. Edison Trends noted that the combined Grubhub-Uber Eats entity would gobble up 45 percent of the market share — the exact same percentage DoorDash currently holds. The latter’s push to win more takeout orders is no doubt also a move to retain some of that market share in the face of the impending deal.

Zomato Cuts 13 Percent of Its Workforce

Zomato, one of India’s largest third-party food delivery services, is cutting 13 percent of its workforce and requiring the rest of its employees to take a pay cut, according to the Economic Times. Not surprisingly, the moves are in response to the ongoing pandemic and its effect on the food delivery industry in that country. 

Those affected by the layoffs will receive their health benefits as well as half their salary for six months or until they find their next job. In June, the rest of the company will take a temporary pay cut to preserve as much cash as possible. The cuts are expected to be for at least six months.

In an email sent to staff, Zomato founder and CEO Deepinder Goyal wrote that the company is preparing for “things getting worse” in terms of COVID-19 and the simultaneous collapse of the restaurant industry as we know it. He noted that many restaurants in India have already shut down permanently. “I expect the number of restaurants to shrink by 25-40% over the next 6-12 months,” Goyal wrote.

Zomato’s news comes just after Swiggy, it’s chief rival in India, announced layoffs of its own, also in response to COVID-19. Swiggy cut about 1,000 jobs at the end of April, mostly in its ghost kitchen division. This came just weeks after it announced a $43 million Series I fundraise.

It’s not just India, either. Worldwide, third-party delivery services have been making cuts as business gets drastically and negatively impacted by the pandemic and country-wide lockdowns. Deliveroo cut 15 percent of its staff at the end of April. Uber has made layoffs that affect some Eats employees. The company also recently exited eight markets.

Zomato actually bought Uber’s Eats business in India for $206 million at the beginning of March, before the country went into lockdown. Goyal didn’t mention the deal in his letter, which was much more focused on outlining ways in which the company is going to save cash and prepare for things to get way worse before they get better. Seems like the rest of the food delivery industry should do the same.

Report: Uber Wants to Buy Grubhub

Uber has made an offer to buy Grubhub, according to a report from Bloomberg. A potential deal could be reached as early as this month and would be an all-stock takeover where Uber would absorb Grubhub into its overall operations.

Details on this story are still forthcoming. 

Food delivery has been a booming business for Uber of late, with its Eats business seeing a 52 percent increase in gross bookings for the first quarter of 2020. However, the company remains committed to its strategy of only operating in markets where it is the number one or number two player. That has led Uber to exit certain global markets — India, South Korea, a bunch of Middle Eastern countries — where local delivery apps are far more popular.

That strategy is much tricker in the U.S., though, where DoorDash leads in terms of market share and Grubhub comes in second in many cities, according to recent numbers from Second Measure. Sticking to its strategy of only operating in markets where it is the number one or two service would mean Uber would have to exit many U.S. cities.

Hence a potential deal with Grubhub. The combined forces of the two would in all likelihood knock DoorDash out of the top spot in many places, and give Uber a larger share of major metropolises like New York City and Chicago. 

This kind of market consolidation was already in the works before the pandemic hit. Last year, Just Eat and Takeaway.com announced a merger that was finally recently approved. Delivery Hero bought South Korean service Woowa Bros. for $4 billion. And Brazil-based iFood announced, also in 2019, that it was merging with Colombian delivery heavyweight Domicillios.com, to corner more of the Latin American market. All of which is to say, it was only a matter of time before third-party food delivery consolidation came for the U.S. markets. 

Update (May 12): Grubhub released the following statement today:

“While our policy remains to not comment on specific market rumors, we want to reiterate our views with respect to M&A-related matters given the current level of recent speculation.

“We remain squarely focused on delivering shareholder value. As we have consistently said, consolidation could make sense in our industry, and, like any responsible company, we are always looking at value-enhancing opportunities. That said, we remain confident in our current strategy and our recent initiatives to support restaurants in this challenging environment.”

Food Delivery Was a Booming Business for Uber in the First Quarter of 2020

Despite the gargantuan loss of $2.94 billion Uber posted, the company’s Eats business saw massive growth during the first quarter of 2020. For Uber Eats, the company saw a 52 percent increase in gross bookings, or $4.68 billion, according to the company’s first-quarter results.

“The big opportunity that we thought Eats was just got bigger,” Uber CEO Dara Khosrowshahi said on an investor call this week, adding that “at a time when our Rides business is down significantly due to shelter-in-place, our Eats business is surging.”

Other Eats numbers from the quarter, according to the results, include:

  • Eats Adjusted Net Revenue of $527 million, up 124% on a constant currency basis due to “a mix shift toward small and medium sized restaurants driving higher basket sizes coupled with courier payment efficiencies, namely in the US.”
  • Eats adjusted EBITDA loss was $313 million or negative 59.4% of ANR.
  • Resulting adjusted EBITDA of a $313 million loss, worse than its year-ago result of $309 million

Khosrowshahi said on the call that small-to-medium-sized restaurants “continue to be a significant part of our business and our growth going forward.” No mention was made of the ongoing battle between third-party delivery services and governments mandating caps on the commission fees companies like Uber Eats charge these small and medium-sized businesses. 

Uber Eats is also playing by the strategy of investing only in markets where it holds the number one or number two position. To that end, the company exited eight countries this week, most of them in the Middle East. “This move will allow us to redouble our efforts in markets with larger long-term potential and higher returns like the US.,” said Khosrowshahi.

Also this week, Uber said it plans to lay off 3,700 people, or 14 percent of its staff, in response to economic challenges from the pandemic. As of now, Eats does not appear to be affected by the layoffs.

Boston, D.C., and Baltimore Join the List of Cities That Want Caps on Third-party Delivery Fees

Baltimore, Boston, and Washington, D.C. all recently joined the growing list of cities imposing mandatory caps on the commission fees third-party delivery services charge restaurants. San Francisco, Chicago, NYC, and Los Angeles have already passed similar measures or are considering them.

The D.C. Council passed emergency COVID-19 legislation on Tuesday that, among other things, capped commission fees at 15 percent during the city’s state of emergency. As the Washington Post noted, “The commission cap, similar to ones implemented in Seattle and San Francisco, is meant to help eateries turn profits on those sales.”

Last week, city council members in Boston proposed an order for a hearing to discuss the possibility of caps on commission fees — much like the one NYC just held last week. A date has not yet been set for the Boston hearing. 

Baltimore is legally prohibited from imposing caps on delivery companies, but that didn’t stop Mayor Jack Young from sending a formal letter to DoorDash, Postmates, Grubhub, and Uber Eats, asking them to cap commission fees at 15 percent.

It’s a noble gesture, but Mayor Young might as well be talking to a concrete wall. The major delivery services have made it clear that they strongly oppose any caps on commission fees, arguing that caps would make food delivery orders more expensive for consumers, lessen the number of orders coming through the platforms, and ultimately harm both restaurants and the delivery companies themselves. As a Grubhub representative put it at last week’s NYC hearing, “These caps may force us to exit certain markets or suffer substantial losses that threaten the sustainability of our businesses.” 

To which one council member replied, “You’re saying a lot of stuff would force you to operate at a loss but you don’t seem to care that you’re forcing restaurants to operate at a loss.”

Grubhub, in particular, has taken severe (though deserved) heat for the way it has handled it has restaurant relationships during the COVID-19 crisis. The service sent out a press release back in March that led many to believe it was waiving commission fees for restaurants during the health crisis. In actual fact, Grubhub was only deferring those fees, and the policy included a lot of unsavory fine print that won the company yet-more bad press. And if you haven’t yet seen the viral Facebook photo that shows just how little restaurants collect from third-party delivery orders, check it here to understand why restaurants are nowhere near turning a profit under the current commission fee policies.

Other services are at least appearing to be more helpful. Postmates temporarily waived commission fees for independent restaurants, though the move only applied to new businesses signing with the platform and based in San Francisco. DoorDash has waived commission fees for all its independent restaurants through the end of May.

But what happens at the end of May? And what happens if a second wave of the novel coronavirus imposes another set of shelter-in-place mandates?

The entire restaurant industry is forever changed because of this pandemic and the dining room shutdowns it has caused. Menus are shrinking, restaurants will re-open with less seating, major chains are overhauling their entire store formats, and small businesses are going to have to adapt to technologies and procedures they might never have considered before. Delivery companies could do themselves and everyone else a huge favor by implementing their own fee caps and accepting that they’re part of the restaurant industry and need to share in some of the pain. Otherwise they can expect more government fee caps and regulations, and I wouldn’t be surprised if the whole industry forcefully turns on them at some point down the line.

It’s Now Easier to Send and Share Food Delivery via Uber Eats

Last-minute shoppers may find themselves in a bit of a bind with Mother’s Day this year. With large parts of the country still sheltering in place, getting to a store is complicated, and Amazon deliveries aren’t as reliably speedy as they used to be thanks to a huge uptick in demand. So if you haven’t gotten that gift yet, you better hop to it.

However! Uber Eats announced a feature today that could come to a procrastinator’s rescue. In a corporate blog post, the company said it was now making it easier to send and share food delivery with other people. You can send things like a Starbucks latte or a sweet treat to a friend (or, you know, your mom) and the recipient can track the order in real-time to know when it will arrive.

The new send feature arrives at a time when a recent survey from US Foods found that when it comes to food this Mother’s Day, 53 percent of moms said they want takeout or delivery from their favorite restaurant. Uber Eats’ send and share is global, so even if sheltering in place has you socially distant from your own mom (even around the world), you can still deliver a fun dining experience for her.

Although, Uber got a little less global this week. On Monday, we reported that Uber Eats is exiting the Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Uruguay, and Ukraine as of June 4. The company is culling markets where it doesn’t have a leadership position.

And in news that reminds us of the grim times we are in, TechCrunch reported today that Uber has plans to lay off 3,700 people or 14 percent of its workforce. According to an SEC filing, Uber said the layoffs were “in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic and its impact on the company’s business.” Those cuts are coming from the recruiting and community operations.

An upgraded sharing feature won’t do much to move the needle on the Uber Eats’ lack of profitability. But it does make it easier to share some food and some kindness with others at a time when they might need it most.

Uber Eats Is Exiting Eight Markets

Uber Eats Is exiting the Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Uruguay, and Ukraine, according to a regulatory filing from today flagged by TechCrunch. The company’s ride-hailing business will not be affected.

The filing notes that, “These decisions were made as part of Uber’s ongoing strategy to be in first or second position in all Eats markets by leaning into investment in some countries while exiting others.” The company will “fully discontinue” operations in the above companies by June 4, 2020. 

Uber also announced, in the same filing, that it is transferring its Eats business in the United Arab Emirates to its wholly owned subsidiary Careem, which operates a ride-hailing business around the Middle East.  

The company will “look to reinvest these savings in priority markets where we expect a better return on investment.”

An Uber spokesperson told TechCrunch that the filings are not related to coronavirus. Rather, they are part of the company’s strategy to be in the first or second position in all of its markets. Earlier this year, the company sold its Eats business in India to local third-party delivery service Zomato. It exited the South Korean food delivery market last year.

Worldwide, the third-party food delivery sector is feeling the economic strain brought on by the COVID-19 pandemic, which has forced many restaurants to close and made some customers wary of ordering out. Hailed not so long ago as the lifeline for restaurants, delivery services are now struggling with the rest of the industry. Last week, Delivery Hero subsidiary Foodora exited the Canadian market. UK-based Deliveroo, which recently got much needed approval on its investment from Amazon, said last week it was cutting 15 percent of its staff.

Stateside, local governments are imposing mandatory caps on the commission fees third-party delivery services charge restaurants, a move that could further erode both the on-demand business model these companies rely on as well as any shot they might have at future profitability. Uber’s news today will not be the last we hear of delivery services leaving entire markets and restructuring their strategies moving forward.

Fight Club: Mischief. Mayhem. Third-Party Delivery Fee Caps.

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If you like a good fight, the one around restaurant commission fee caps is worth watching. I spent the better part of three-plus hours the other day tuned into the New York City Council’s Committee on Consumer Affairs and Business Licensing public hearing. One hotly debated topic was around capping commission fees third-party delivery services like Grubhub and Uber Eats charge restaurants.

I’d love to say everything got resolved and NYC will be placing caps on third-party service commission fees for all time. The reality is that this fight was here long before the pandemic and will be around long after it leaves.

I’m sure you’ve heard of the brouhaha brewing around the issue. Restaurant industry advocates and businesses alike had flagged those third-party delivery commission fees — which can go as high as 30 percent per transaction — as prohibitively expensive for restaurants. With dining rooms closed now, most restaurants are left with the options of either shutting down completely or relying on a third-party service like Grubhub to help them execute on delivery orders.

One restauranteur who testified at this week’s hearing explained that for independent restaurants, the fees are more or less non-negotiable. (Side note: he also expressed fear of retaliation from delivery companies for his speaking at the hearing.) Jessica Lappin, a former NYC council member and the President of the Alliance for Downtown New York, said that even if restaurants are doing takeout and delivery right now, they are doing it at a loss. Council member Mark Gjonaj suggested that due to the commission fees, each transaction a restaurant makes is “yielding a net loss.”

Perhaps the most telling moment came when a Grubhub representative took to the mic to “express Grubhub’s strong opposition” to fee caps. You can watch the entire (and rather circular) debate that broke out here, but it more or less boiled down to the idea that if NYC and other cities successfully impose fee caps, Grubhub et al. will have to change their business model.

Therein lies the marrow of the matter in terms of why third-party delivery companies oppose commission fee caps and other changes (e.g., reclassifying workers as employees). Government oversight of those fees cost these companies more money, and further erode their chances of ever becoming profitable. An unprofitable model won’t satisfy investors, and third-party delivery as we know it would then be on the rocks.

Sky-high delivery fees and a faltering economy won’t help the model in terms of its attraction to the average end consumer. And they certainly won’t improve the net-negative returns restaurants are making at the moment.

In some cities, Big Government has already stepped in. San Francisco, Seattle, and Chicago have all introduced fee caps that will last at least as long as dining rooms remain closed. Los Angeles is considering a similar measure. NYC’s proposed 10 percent cap was actually introduced months before the novel coronavirus hit the U.S. in full force. 

As emergency measures, these fee caps feel necessary right now if independent restaurants are to have any kind of shot at keeping the lights on. Longer term, everyone (restaurants, advocates, government, tech companies, and consumers) will have a responsibility to address how much damage the delivery model is actually doing. It seems a global pandemic that’s taking lives and shuttering businesses isn’t enough to make some of these services stop siphoning the livelihood from restaurants. Are those really the businesses we want calling the shots in the restaurant industry in the future?

McDonald’s limited menu is good news for the drive-thru lane.

Among other things, like drive-thru lanes generating more sales, McDonald’s spent quite a bit of its earnings call this week talking about its menu. Since shelter-in-place orders forced the chain to close down dining rooms and rely on off-premises orders, McDonald’s has been offering a limited menu. For example, it doesn’t offer breakfast for the time being.

Cuts like that were made to help the mega-chain manage the operational difficulties restaurants face right now. On this week’s call, CEO Chris Kempczinski suggested customers should not expect every McDonald’s in the nation to immediately revert back to its pre-pandemic menu.

Smaller menus for the long term could work in McDonald’s favor, though. When we looked at the QSR Drive-Thru Study last year, one of the standout points was the steady increase in drive-thru wait times over the last couple decades. Growing right alongside those wait times has been the number of items QSRs offer on their menus.

These complex menus take longer to read, present customers with the tyranny of too many choices, and up the risk of an order being inaccurate when it is ready. None of those things make for speedy service, and with more customers likely going to opt for the drive-thru lane over the dining room now, finding ways to fulfill orders faster is crucial for QSRs.

No one is suggesting we revert back to my favorite picture of all time, this McDonald’s menu from the ’80s. But as restaurants pare down menus and plan to work with reduced capacity and limited staff once they reopen, the bloated mess of choices QSR’s previously offered may become a thing of the past.

Sweetgreen just added dinner options.

One company not paring down its menu is Sweetgreen. On LinkedIn this week, cofounder and Chief Brand Officer Nathaniel Ru unveiled the chain’s new dinner menu, called Plates.

For the last four weeks, the tech-forward fast-casual chain — most widely known for its highly Instagrammable salads — has been testing a Sweetgreen dinner menu. Via a post on Medium, the company said the process has been about “operationalizing an entirely novel concept (normally a year-long process) in just 30 socially distant days.”

That 30-day process looks, from the photos, to have turned up a menu full of plant-centric dishes and lots of legumes, grains, and sauces. If you want more details around how the team put this new concept together, the full Medium post is definitely worth a read.

Sweetgreen had been planning the dinner concept for some time in the hopes of launching it next year. But, as the Medium post notes, “given the current state of uncertainty, the need for warm, familial, and home-cooked food has never felt more important.” 

They’re right on the money. Family-style meals and comfort food are two major trends right now for restaurants as people shelter in place. I’ve never considered couscous and warm leafy greens comfort food, but I’m from rural(ish) Tennessee so what do I know? Plenty of folks are health conscious these days, and with many consumers likely to be wary for some time about going out to eat, a dinner concept is a smart play for Sweetgreen. 

Now if we could just get it delivered without those pesky commission fees. 

Toronto, Canada Considering a Cap on Third-Party Delivery Fees

Toronto, Ontario mayor John Tory is considering imposing a cap on the commission fees third-party delivery services like DoorDash charge restaurants. He has said he will impose an emergency, temporary cap on those fees “if his emergency powers allow him,” according to an interview with Canada-based publication The Star.

Tory’s words come shortly after San Francisco, CA imposed its own emergency order last week, mandating that delivery services must cap restaurant commission fees at 15 percent if they want to continue doing business in that city. (Delivery services typically charge around 30 percent per transaction.) For now, that’s a temporary order, meant to assist restaurants struggling with dining room closures as residents shelter in place.

Unfortunately for Tory and Toronto restaurants, imposing a similar measure might be more of an uphill battle. Speaking to The Star, the mayor said that’s at least what “preliminary feedback from city legal suggests.”

So in the meantime, Tory is trying other tactics — including reaching out to the delivery services themselves. At the end of last week, he also left the following tweet, directed at those services:

Not surprisingly, delivery companies are defending their stance on commission fees, according to The Star. How long they can keep that up is another matter, because Toronto isn’t the only city considering potential commission fee caps. Last week, Eater pointed out that elected officials in NYC are asking Mayor Bill de Blasio to issue an emergency order similar to the one in San Francisco. Others are urging the same, including council member Mark Gjonaj, who previously introduced legislation around commission fee caps.

There’s no guarantee a measure will pass in Toronto, NYC, or any other place at this point. Even if they do, emergency caps are a surface-level fix to a much deeper problem around the amount of power food delivery services have over the livelihoods of restaurants. For many (most) businesses, offering delivery via DoorDash et al is still cheaper than trying to manage the logistics and driver fleet oneself.

That doesn’t negate the fact that charging a restaurant 30 percent of each transaction practically annihilates already-thin restaurant profit margins. Third-party services were also the subject of (yet another) controversy recently when a new lawsuit emerged, alleging Grubhub, DoorDash, and others are using their market power to push menu prices higher during the pandemic.

Finally, there is growing evidence that a delivery strategy in the midst of a pandemic won’t be enough to save restaurants.

Temporary caps in the wake of this unprecedented restaurant industry fallout are fine for now. But until we start addressing some of the fundamental flaws with the inherently greedy — not to mention unprofitable — third-party delivery model, the problems will proliferate, pandemic or no. Restaurants and their hourly workers will shoulder the bulk of those burdens.

Grubhub, DoorDash, and Other Delivery Services Are Getting Sued Over Restaurant Prices

A class action lawsuit filed Monday alleges that third-party delivery companies DoorDash, Grubhub, Postmates, and Uber Eats are using their market power to push menu prices higher during the coronavirus pandemic, according to Reuters. 

The three consumers who initiated the suit allege that third-party delivery companies dictate in their contracts the prices restaurants can charge for orders — even those placed directly with the business and not via delivery apps. These terms along with sky-high commission fees that can reach 30 percent or higher for each transaction, are in turn forcing restaurants to raise menu prices across the board. Paying customers ultimately shoulder that cost, whether they’re getting food delivered or eating in the restaurant dining room.

Of course, no one is eating in the restaurant dining room at the moment, but that’s another motivating factor behind the lawsuit, which has been filed against the backdrop of a global health crisis that’s shut down dining rooms and sent the entire restaurant industry spiraling.

With off-premises orders one of the few lifeline’s restaurants have right now, more businesses are forced to work with these third-party delivery services in an attempt to keep from going under. Customers ordering directly from the restaurants is better for business, but when third-party companies are dictating the menu prices, the cost hike ultimately falls on the consumer.

As the lawsuit, notes, third-party delivery apps offer “a devil’s choice” to restaurants: “In exchange for permission to participate in defendants’ meal delivery monopolies, restaurants must charge supra-competitive prices to consumers who do not buy their meals through the delivery apps, ultimately driving those consumers to defendants’ platforms,” it said. 

The lawsuit is just the latest addition to an ever-growing list of griefs advocates, lawmakers, customers, and the restaurants themselves have with third-party delivery companies. Many of those griefs, such as the high price of commission fees, are even more pronounced now that dining rooms are shuttered and some restaurants are having to close their doors permanently.

Meanwhile, reading any announcements about “relief” companies like DoorDash or Uber Eats are providing restaurants during the pandemic has become an exercise in reading between the lines to decipher the fine print. Case in point: Grubhub said in March it would provide relief by deferring commission fees for restaurants. Those fees have to be paid back within four weeks of the relief period ending, and simultaneously lock restaurants into a full year of being on Grubhub’s platform.

Last week, San Francisco introduced an emergency measure to cap commission fees from third-party delivery services at 15 percent. Some services, notably DoorDash and Postmates, are cutting down or waiving those fees for a set period of time. However, those measures are band-aids to a problem that existed long before the pandemic hit and will persist long after it subsides.

Unless enough customers get fed up with third-party delivery tactics. This week’s lawsuit suggests that is already happening. As of last week, 17 million people have filed for unemployment in the U.S., and analysts expect that number to keep rising. Many consumers are finding themselves in a position where it will be hard to pay the bills, let alone a hiked up menu price on a bowl of pasta from their local restaurant. And if a restaurant doesn’t have the power to change the price on that pasta, everyone loses out, and the power of these delivery companies has, in the words of this week’s suit, “come at a great cost to American society.”