Imagine you want to try that restaurant across town you’ve been hearing about. So you type its name into Google, find its menu and – this being the year of COVID – order for delivery.
But the food’s a little more expensive than you thought it would be, and when it comes – later than expected – it’s missing an item, and a little on the cold side.
Think you’re ever ordering from there again?
Those are among the problems many people are encountering around the country when it comes to third-party food delivery services, such as DoorDash, Grubhub, Postmates and Uber Eats, who hold the reputations of restaurants in their hands but have a troubling history of unsavory tactics.
The city of Portland, one of the top restaurant cities in the country, is considering new rules governing the delivery services after a number of restaurants complained that the companies were hurting their business, the Press Herald reported this week.
One, a local coffee shop owner, said his place was listed twice on DoorDash, leading to orders his business was not prepared for. Another said a Grubhub ad is now his first listing on Google. Neither owner partners with any of the national delivery services.
Stories like those are common across the country. In most cases, the national food delivery services are allowed to offer delivery from any restaurant; it can be difficult, restaurants say, to be removed from their site.
Often, they grab a menu off the internet and post it, whether it’s accurate or not, leading to customer confusion. Then they not only charge the customer for delivery but also charge the restaurant an often-exorbitant service fee, taking away most if not all of the profits from the order.
When it comes to delivering food, it’s a poor business model that has rarely turned a profit.
But companies like Grubhub are backed by billions in venture capital, which they have used to take control of markets. They can afford to take a loss on deliveries in order to bring in customers. They can put their results on the top of the search engine so that hungry customers are more likely to find a restaurant through the delivery service.
In both ways, they are able to build a customer base separate from restaurants, making them a power the food industry can’t ignore.
The national delivery services have also reportedly used more underhanded means to the same end, buying up domain names related to tens of thousands of restaurants, and creating websites and phone numbers designed to fool customers into thinking they were dealing with the restaurants themselves. Workers, who are contractors, rather than employees, have cited mistreatment.
Those actions have angered restaurant owners and others, but they’ve also secured them the market. The four services mentioned above account for 98 percent of all food delivery sales.
That sort of dominance gives them far too much control over restaurants at a time when delivery is becoming a bigger part of the business.
It also makes it difficult for any competition to take hold, even if it offers better service for customers and restaurants. Though the Portland area has two local delivery options – CarHop and 2DineIn – the national services are still major players, whether the restaurants want them to be or not.
That’s not the way it should work.
Portland is among the places now considering a requirement that the services have a formal agreement with any restaurant whose food it delivers, as well as capping service fees. So is New Hampshire.
Other jurisdictions, too, should consider regulation that favors good service over venture financing.
Food delivery has been a godsend during the pandemic, and its importance in the food service industry will remain prominent from here on out.
As the industry changes, Maine should make sure that benefits to delivery services don’t overtake those to restaurants and customers.
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