Delivery Eating Up the Profits of Restaurants

By Aishani Sankuratri

“Confirming your order,” I clicked, giddily awaiting my favorite Pad Thai noodles along with the spot’s signature Green Thai Curry. What roused my excitement even more was with whom I would be enjoying my meal: my 84 year old grandmother, who had been looking forward to her birthday dinner all week. After finishing our hearty meals, I proceeded to pat my stomach, as it was full not only with noodles but also with contentment; I was so happy to have helped a small restaurant stay afloat during these troubling times. But, upon further research into ways to help small restaurants, I found out that these convenient delivery services do more to hurt my favorite restaurants than to help. 

As New York’s Mulberry & Vine report to the New Yorker, “We know for a fact that as delivery increases, our profitability decreases.” In fact, between twenty and forty percent of the revenue earned from each order goes to third-party platforms and couriers, both of which are becoming increasingly expensive, causing restaurant owners to lose money or break even at best. In addition, infamous for its slim profit margins, a twenty to forty delivery-service charge adds even more financial burden; thirty percent of revenue goes toward the cost of ingredients, another thirty for the cost of labor, and the remainder for rent, utilities, insurance, supplies, credit-card fees, and profit. This is especially harmful to small restaurants, such as Curry-Ya, a Japanese restaurant in Harlem who told the New Yorker that  “sometimes it seems like we’re making food to make Seamless profitable.”

Unfortunately, though, businesses nowadays don’t have much of a choice. Another New York restaurant owner described delivery as “crack cocaine,” in that his revenue stream had become dependent upon delivery services that may ultimately be crashing them into the ground. Ultimately, restaurants must submit to the system even if it means losing profits. 

It’s hard to determine an alternative business model given the tremendous popularity of delivery services. DoorDash has experimented with leasing remote kitchen space to restaurants, imagining a segment of the restaurant industry similar to Uber itself. As of now, there is no viable, alternative business model adapted to a delivery-dominated industry. Until then, we can all pitch in by, instead of ordering through an app, pick up our orders from the restaurant itself, for the benefit of your mealtime companion and the restaurant itself.