Delivery commissions take bite out of restaurants’ bottom line

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This article was published 16/04/2020 (1979 days ago), so information in it may no longer be current.

Peter Truong is stuck between delivery app overhead and a hard place.

Truong is the co-owner of Kyu Bistro, and like most Winnipeg restaurateurs, he has moved to a takeout and delivery model to retain some revenue during the pandemic.

Kyu’s three restaurants — Kyu Bistro, Kyu Bochi and Kyu Grill — rely on Skip the Dishes, Uber Eats and DoorDash to get orders to customers, but Truong said the cost of third-party food delivery services is not worth the convenience.

“The margins are already low for restaurants and during this time business is not the same, so giving up any amount of commission hurts us,” he said.

For every $10,000 worth of deliveries, Truong estimates he pays a total of $2,500 in commission to the three services.

In March, Skip the Dishes rolled out a 15 per cent commission rebate program for restaurants in its network. On Thursday, the Winnipeg-based company announced it would bump up the rebate to 25 per cent for independent restaurants during the next six weeks.

“It’s important that we support restaurants, it’s the business that we’re in,” said chief executive officer Kevin Edwards. “We need to come out of this with strong, independent local hero restaurants.”

The platform introduced an option for customers to tip restaurants directly while ordering. To date, Skip users across the country have made $200,000 in direct gratuities.

Truong said the longer his dining rooms stay closed, the more unsustainable it is to continue using Skip’s services, even with the higher rebate.

“Any percentage does help, but I’m sure every restaurant is in the same boat… the commission they charge is huge,” he said.

He is considering starting an in-house delivery service to hold onto more revenue and create more work for his staff.

Edwards said more local restaurants have joined the platform, including Jena Rae Cakes, Brazen Hall and De Luca’s. He wouldn’t say whether there has also been an increase in restaurants cancelling Skip service because of cost.

“Everyone has to make their own decisions based on their own business model,” he said.

Independent restaurants across the country are getting a boost from initiatives such as Canada Takeout, which has started a social media campaign to make Wednesdays national TakeoutDay. Truong added Kyu Bistro to the group’s online listing service and was surprised by the response on April 15, the inaugural day of the promotion.

“I didn’t think it was going to matter,” he said “But definitely yesterday’s sales were up… it was a lot busier.”

Shaun Jeffrey, executive director of the Manitoba Restaurant and Foodservices Association, said TakeoutDay is a positive way to call attention to the fact Manitoba’s 1,900 restaurants are facing significant challenges now.

“For most restaurants, about 70 to 80 per cent of their revenue is from dine-in, so now they’re strictly relying on takeout and delivery,” he said. “Trying to run any business with 20 per cent of what you had six months ago is substantially different.”

Jeffrey said there have been some positive developments, such as the provincial government’s decision to allow restaurants to sell alcohol with delivery and takeout orders, and the federal government’s emergency benefit, which gives laid-off workers financial relief.

“If you want our industry to look the same after we come out of this situation, then we have to continue to support as much as possible,” he said.

eva.wasney@freepress.mb.ca

Twitter: @evawasney