Running a restaurant is a huge challenge at the best of times. When the government forbids customers to come through the door because of a world-wide pandemic, hard becomes impossible.
It must have felt like a lifeline when ride-hailing companies like Uber offered to get cooked meals to customers by delivering food to their residences. The convenience of this will continue as the pandemic restrictions end, but is this something we should be celebrating?
I know I often complain about things that are popular and convenient when it comes to food purchasing. Here’s what I’m looking at. In a perfect world there are very few hands out between the farm gate and the dinner plate, so farmers get as much of the consumer dollar as possible. I also question whether the people who take on the risk and do most of the work, get paid fairly. Using all of these tests the food delivery business (Uber Eats, Doordash, Skip the Dishes, and so on) fails very badly.
I spoke to a handful of restaurant owners and while some appreciated keeping their kitchens going during the pandemic most were pretty negative, some downright hostile, about the food delivery firms. It’s not hard to understand why. It’s the quality and reputation of restaurants that are the selling point to consumers, but it’s the delivery companies that run this business.
Look at the all the ads on television and it’s Skip the Dishes, Uber Eats, Doordash and the like doing the advertising. It’s these companies’ apps consumers are using to order food. The delivery isn’t a necessary add-on to the restaurant, it is the business consumers interact with.
There’s even more consumer separation from local restaurants with the proliferation of “ghost kitchens” in large cities. These are essentially food trucks that produce branded meals for the
delivery companies to deliver to consumers. This is how Wendy’s executive Stephen Piacentini describes a Toronto ghost kitchen: …. through this method, they can “bring Wendy’s into dense, urban areas without the overhead of operating a traditional restaurant space.” In other words who needs a restaurant?
What about the economics of all of this? The cost for restaurants to use these delivery services ranges from 13% to as much as 60% of the food bill (smaller restaurants tend to pay more). During the pandemic several jurisdictions limited the delivery charge to 10% and many restaurants are pushing for this to be permanent. The delivery companies are desperately fighting the move.
Why? This is what’s so interesting about the delivery business. No one is making any money. In fact most lose hundreds of millions every year. There’s simply too much competition, too many companies willing to make deliveries.
Respected Toronto Star business writer David Olive recently wrote that Uber for example has no business to even exist. Uber’s last quarter losses were $134 million, while the company’s total losses over the last four years are a staggering $27 billion (yes billion). Olive calls it “one of the least successful big companies on Earth. “ The company’s drivers are poorly paid with no benefits, and, surprisingly, there’s good evidence that the proliferation of delivery companies has made traffic congestion worse. Olive quotes Janette Sadik-Khan, former New York City transportation commissioner, who tweeted “As Uber and Lyft add to city traffic, lose billions of dollars , and undermine transit, we need to ask ourselves what transportation problems they solve.”
I’ve always seen the building blocks of a sound regional food system as farmers, markets and retailers, and, on PEI, our chefs who are important promoters of the quality and importance of local production. The pandemic was a special situation, hopefully not repeated, and required innovative solutions to keep people supplied with the needs of life.
Ride hailing companies provided that by shifting to food delivery, giving restaurants a chance at surviving. New companies joined the competition virtually guaranteeing no one would make money. As things get back to normal are these food delivery companies offering anything beyond convenience, and another business grabbing some of the consumer dollar?
There’s more to consider, something else that’s important to recover, something we all need after the isolation forced on so many with pandemic lockdowns. Yes ordering food and groceries from home is convenient but it also removes the social nature of going to restaurants and local food markets, seeing and interacting with other people, feeling part of a bigger community. That’s much different from having an underpaid and overworked stranger bringing food to your door.