Restaurants were quick to sign up with delivery companies such as Grub Hub Inc., Postmates Inc. and Louisiana-based Waitr to reach more customers, but growing competition in the delivery business is emboldening many restaurants to seek lower rates from such companies, The Wall Street Journal reports.
Restaurateurs say high fees dent their profits, contending lower fees and more promotional spending by delivery companies could increase customer choice by enticing more establishments to offer delivery.
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.
Some restaurant executives say they were too quick to accept unfavorable terms from delivery companies, fearing they would otherwise meet the same fate as clothing stores and bookstores whose sales have been felled by online delivery. U.S. food-service delivery sales reached $34 billion last year, up 13% from 2017, research firm Euromonitor said.