Cinco de Mayo would be Israel Sanchez’s biggest sales day of the year. With his dining room at Cesar’s on Broadway shut off to the public, he’s not about to hand over a cent of that holiday revenue to a food delivery service.
“All we’re trying to do is make sure that everything that’s going out, we’re getting as much in return,” Sanchez said.
Sanchez said his restaurant paid over $13,000 to Grubhub last month alone. So he decided he’d try to minimize the middleman and deploy his own delivery drivers.
“Now we have extra personnel that maybe before were bartenders or servers, now we’ve given them the opportunity to still stay employed and make some money,” Sanchez explained.
But convenience and habit can be tough to contend with.
“I’m just so used to it and t’s so easy for me to go on my phone and access it,” Grubhub customer Michael Lucente said. “I’m willing to give up that small little price.”
“These third-party delivery services charge a huge commission that customers don’t even understand they’re paying,” said Sam Toia, CEO of the Illinois Restaurant Association. “They charge up to 30%, so if you have a $20 order $6 is going to these third-party delivery services.”
Chicago-based GrubHub said they charge restaurants a 10 percent fee to deliver on their behalf and roughly 15 percent for places to just market on the app. Those choices are optional, but GrubHub said restaurants may not anticipate all the costs with doing their own delivery.
UberEats said they’ve currently reduced fees to on orders where restaurants use their own delivery people.
“Obviously we don’t have as big of a footprint as the third party apps, but we’re making do and actually starting to make a dent in deliveries,” Sanchez said.
And he’s donating 10 percent of those orders back to community schools.
Full statement from Grubhub:
Our mission since we were founded here in Chicago in 2004 has been to connect hungry diners with great, local restaurants. We’ve built a marketplace that enables restaurant owners to reach a network of more than 22 million diners across the country. Restaurant owners select the services they want and only pay us when we help generate sales. We’re happy to work with restaurant partners to help them manage costs and grow their business.
Our platform is free for any restaurant owner who wants to join since we have a fee-for-service model. If a restaurant wants us to deliver on their behalf, there is a 10 percent fee to provide this service. This is optional; a restaurant can choose to perform its own delivery. But the costs associated with delivery are not optional. For instance, it costs money to coordinate drivers, perform driver background checks, and create/update delivery technology.
We also allow restaurants to market themselves on the platform and each restaurant owner determines the right level of marketing for his or her business. The average marketing fee is around 15 percent, and restaurants can choose to spend more if they believe it will drive more orders to them.
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