Some restaurant operators are pushing back against fees charged by delivery companies
By Heather Haddon June 23, 2019 5:30 am ET A DoorDash delivery biker in San Francisco. Photo: Jason Henry for The Wall Street Journal Some of the biggest restaurant operators are pushing back against fees charged by delivery companies, turning up the heat on young businesses already wrestling with rivals in an increasingly crowded market for bringing food to people’s doors.
Delivery has quickly emerged as one of the biggest conundrums facing the food business, from restaurants to groceries. Consumers want the convenience, but the technology and logistics required to get it right—whether in-house or through an outside provider—often are more costly, outweighing any additional revenue generated.
That flood of capital has allowed delivery companies to plow money into their businesses, but also intensified competition. Since 2017, Grubhub’s market share has roughly halved, while DoorDash Inc. and Uber Technologies Inc.’s Uber Eats division have gained business, according to an analysis of credit-card data by research firm Second Measure Inc.
“The economic model is not sustainable in the way it has been structured,” said John Cywinski, president of Dine Brands Global Inc.’s Applebee’s chain, which is renegotiating with delivery companies including DoorDash, Grubhub and Postmates. “What I’m seeing is brands moving that burden away from themselves now to the consumer. And at this point, I’m just a little uncomfortable with that,” said Darden Restaurants Inc. Chief Executive Gene Lee, explaining to investors recently why Olive Garden’s parent company doesn’t offer delivery.
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