Restaurateur Mary Nguyen knows third-party delivery apps are here to stay, but thinks how they do business with independent restaurants needs to change.
“We’re letting these huge companies come in and profit off the blood, sweat and tears of our small businesses that run our economy,” said Nguyen, the owner of Olive & Finch in Denver.
When the pandemic hit, companies like DoorDash and Uber Eats saw a wave of new use. With dine-in business reduced or eliminated, many restaurants felt obligated to use them, and cities including Denver passed temporary laws regulating what the companies could charge eateries.
Three years later, however, the local legislation has long expired. Plenty of people still use the apps, and many restaurant owners find them frustrating — but still keep using them.
Olive & Finch has two locations in Uptown and Cherry Creek, as well as a sister concept, Little Finch, along the 16th Street Mall. Another is in the works at the Denver Performing Arts Complex. The restaurant takes pick-up orders through its website, but doesn’t offer delivery itself.
Nguyen talked to BusinessDen about app commissions and pricing, her thoughts on what the city could do and what she wants customers to know about their Uber Eats order.
The following Q&A has been edited for length and clarity.
BusinessDen: Can you break down how much these third-party services actually take?
Mary Nguyen: It varies on what kind of agreement you have with the different vendors. For us, it ranges from 19 percent up to 25 percent. We specifically have relationships with Uber Eats and Grubhub.
BD: To offset this, do you mark up any of your menu items if they’re ordered through Uber Eats or Grubhub?
MB: We do sometimes. As a consumer, you may type in Olive and Finch but it doesn’t actually direct you to our website, it directs you to their (delivery services’) website. So then you think you’re ordering directly from us but you’re really not and the prices end up being higher.
BD: What’s your average markup?
MN: It depends on the fee that they’re taking. It’s really challenging. Our margins are really tight, they’re very low, so when a third party is taking 20 percent, they’re pretty much wiping any profit that we would be taking. If you’re ordering from Uber Eats, Grubhub or DoorDash, you’re going to be paying higher prices. But again, I don’t think the typical consumer realizes that because they’re so stocked and heavy in their ability to be able to market directly to the consumer that they may not realize they’re actually ordering from a third-party website and not our own website. People can order takeout online from our website. (Editor’s note: On Tuesday, a Farro salad at Olive & Finch cost $16.50 and $19.38 on Uber Eats. Delivering that meal to a LoDo apartment cost $35.80, including the suggested tip.)
BD: How much of your business is from these services versus people coming into the restaurant?
MN: We’re really lucky in that we have a dine-in business, to-go business and catering business. We see higher percentages depending on where people are ordering. For example, our Uptown location is a little bit heavier. It all kind of depends on the environment in that area.
BD: Do you contact Uber Eats and Grubhub about quality control issues?
MN: Absolutely. We really try to stay on top of our partnerships with third parties and reconcile all of our orders every day. We do see a lot of issues where something might be delivered incorrectly, or they pick up the wrong food. I think our challenge is that we don’t control the experience once it leaves our hands. As restaurants, we thrive on creating these experiences for our guests, whether it’s cravable food or beverage, the atmosphere, the service and the hospitality. Through a third party, it really becomes challenging for us to leave the guest experience in an unknown person’s hands.
BD: What could make that better?
MN: I think what change would be the most important is to ensure the fees that are charged to the restaurant decrease. I think for all restaurants we create a brand and we create loyalty and we create an experience. That’s built on our hard work and who we see profiting off that are third-party companies. We don’t make any money off these services, and our team doesn’t make any tips off the services. On top of that, if there’s an issue with the order we end up paying the cost. And most of those issues occur (due) to drivers grabbing the wrong food, delivering to the wrong address, leaving the food to sit too long or environmental factors that are out of our control. That shouldn’t be our responsibility because we made the food. We become the middleman – we’re reaching out and having to talk to guests and offering them gift certificates and making things right, because at the end of the day it is our brand. I think there needs to be more transparency about fees. Also, if there’s issues, they should reach out to Uber Eats or Grubhub or DoorDash directly.
BD: What do you wish the consumer knew about these services?
MN: I would say that if they understood they could order from us directly, we could control their experience a little bit better. They would probably be spending less money and there would be a lot more accountability. The minute they order on Uber Eats or DoorDash or Grubhub, they’re ordering through them, not through us.
BD: How do these services affect small businesses differently compared to large corporations like McDonald’s, for example?
MN: I would imagine that McDonald’s has the ability to negotiate a better commission. They’re probably paying a lot less than a typical independent restaurant like us. We’re paying on average 22 percent of a check to a third party; McDonald’s may be paying half of that. We have to understand delivery makes sense and a lot of people want that. They want to be able to order food and have it delivered to them. We see that every day whether it’s your groceries or your food or products that you’re ordering on Amazon. I think that’s how our day-to-day life has changed, so it’s important as a small business, you have to play. Otherwise you don’t stay relevant in that realm.
BD: Are you saying, in a way, it’s not possible for Olive and Finch to not be on these services?
MN: I don’t want to make a blanket statement, but for us, we’ve chosen to be on those platforms because we know that our guests order through that platform and value those platforms. They value the ease of doing that, of being able to order food and have it delivered to them.
BD: Have you explored adding your own delivery system?
MN: We did delivery during COVID and it just became really challenging after COVID because unfortunately, it isn’t something that is cost-effective for us to do. We see a lot of other independent restaurants have that same challenge and that’s why we have to rely on these third-party companies.
BD: The city implemented a 15 percent commission cap on how much these services could charge in 2020, but it expired in 2021. Do you think the city should be doing more?
MN: When we’re paying 19 to 25 percent, I think we could be doing better. When we’re letting these huge companies come in and profit off the blood, sweat and tears of our small businesses that run our economy, I think that government officials can help us do better. Decreasing the percentage cap would be helpful. Obviously COVID happened and now we’re seeing labor increase, we’re seeing our cost of goods increase, we’re seeing supply chain challenges still, we’re seeing the aftermath of that. I think there’s an opportunity to do better but also to make sure there’s a lot more transparency.
BD: Is there anything else consumers should know?
MN: I think ultimately they definitely offer a service that a typical consumer wants, but it needs to be in a way that’s beneficial to all parties, not just them. I value what they do. It’s not something we as an independent restaurant are able to do. And the way they have it set up, it makes sense for them, but ultimately they are the only ones benefiting, not even the delivery drivers.