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Why Restaurants Feel Trapped By Delivery Apps

Can’t live with them, can’t survive without them

Counter inside a restaurant with delivery options Shutterstock/David Tonelson

The pandemic offered a huge boost to third-party delivery companies like DoorDash and Uber Eats as brick and mortar restaurants around the country were forced to close. Revenue for the four biggest apps doubled from 2019 to 2020, and the market continues to grow. But is that a good thing? Are they profitable? And what has the explosive growth of these companies meant for restaurant owners, delivery workers, and consumers?

Eater is teaming up with technology publication Recode for a special new season of Land of the Giants, the podcast exploring how the biggest tech companies are changing our world, to find out. In a four-part series, we’ll examine how the rise of the food delivery business and the shift in consumer behavior impact an entire an ecosystem of restaurant owners, delivery drivers, and the venture-backed apps themselves. These third-party app companies are giants in the making. And they’re taking the same path that the biggest tech companies in the world — Amazon, Google and Netflix — took before them: A path of disruption in the pursuit of convenience.

In this first episode, we track the rise of the delivery apps from an innocuous menu aggregator in 2010 called Seamless to this investor-backed, wildly aggressive ecosystem dominated by just a few powerful giants — DoorDash, UberEats, and Grubhub. We explore how consumers have come to rely on a convenience that is ultimately subsidized. And most crucially, we talk to restaurateurs who feel completely squeezed by the model.

“I know that they’ve invested a lot of time and money into developing their customer base and their platforms and they’ve come up with great ideas, I don’t knock them and they are a necessity,” says Chris Pugliese, a restaurant owner who says his business probably wouldn’t have survived the pandemic without the third-party apps. But that doesn’t mean he likes working with them. “It’s like I have a new partner, right? The partner’s name is GrubHub and the other is UberEats and they’re all taking their 20-25 percent cut. And I’m in business with them because I have no choice,” he says.

Says fellow New York restaurateur Andrew Ding, “I’m not going to say that the platforms don’t have a place, because it’s a marketplace. It helps for discovery. But what they’ve morphed into is basically modern day mafia.”

Listen to episode one to hear more about the fees, the hacks, the consumer’s role, and how we got here in the first place.

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