Restaurants press delivery apps to keep fees down as they try to recover

Restaurant owners say food-delivery apps have taken too big a bite out of their revenues for too long.

Food-delivery apps were forced to implement lower fees when dine-in service was closed during the COVID-19 pandemic, and restaurants say the change should be made permanent if they are to recover from the crisis.

“I really hope they do keep the lower fees because it does help a lot,” said Sharon Bond, the owner of Kekuli Café in Westbank, B.C. “Costs have gone up tremendously.”

Her remarks come as caps on the fees charged by delivery apps have been lifted or are edging toward summer end dates in several provinces.

Food-delivery companies typically charge restaurants a commission for every delivery, sometimes as much as 30 per cent of the order cost. Fee caps were added by five provinces after dining rooms were forced to close for months during the pandemic, increasing their reliance on meal delivery apps to pay the bills since many were offering takeout for the first time and didn’t have the mechanism to offer delivery themselves.

Ontario, British Columbia, Nova Scotia, Saskatchewan and Quebec temporarily capped commissions between 10 per cent and 20 per cent for as long as stay-at-home orders or restaurant closings were in place.

Asked whether they will consider extending their caps, the provinces said the measures were meant to be temporary, although spokespeople pointed out additional measures such as patio allowances continue.

When the pandemic struck, Ms. Bond had little choice but to use third-party apps for the first time to deliver bannockwiches and tacos to customers of her Indigenous restaurants.

She wants B.C.’s 15-per-cent cap to stay because it helped the restaurant survive and prevent staff layoffs, but she said it will be months until they’re serving a full dining room again.

Kevin Edwards, the chief executive officer of SkipTheDishes, wants to see restaurants rebound from the pandemic, but called the prospect of a permanent cap “scary.”

“There’s no chance we’re going to be able to maintain our platforms with these commission caps,” he said.

SkipTheDishes charged restaurants a 25-per-cent commission on meals prior to the pandemic, but when the crisis began, it used a rebate to ensure local, independent restaurants pay less than 20 per cent in commission while dining in is suspended. New restaurants joining the platform during the restrictions were not charged any commission for 30 days and those using their own staff for deliveries paid a 10.5-percent commission.

Meanwhile, Uber Eats, which typically charges a 30-percent commission, dropped fees on pickup to zero, online ordering to 7.5 per cent and 15 per cent for restaurants doing their own delivery.

When asked about caps, the company said in an e-mail that it operates at a “negative margin” and fees don’t provide profit for Uber, and the company needs to be able to cover operating costs.

Provincial caps, Mr. Edwards said, were enacted with little consultation or notice and didn’t consider existing relief programs or the more pressing needs of small businesses.

For example, he said many of the caps didn’t zero in on independent restaurants alone, so national chains and other successful brands accounted for between 50 per cent and 60 per cent of the rebates Skip gave out. If caps continue, he imagines it will get harder for delivery services to expand to new markets and manage costs. “The customer is going to have to bear the burden” he said. “You can’t not be viable.”

Toronto restaurateur Chieff Bosompra says he believes the sweet spot for fees is between 10 per cent and 15 per cent, but admits even 20 per cent is acceptable.

Given how many people are affected by the fees, he would like to see an industry working group giving app companies, restaurants, couriers and cities a venue to discuss how fees and policies can be fair to all. “It’s like a gift and a curse,” he said of delivery apps. “We need them and they know we need them, so they’re really squeezing us.”