Delivery Apps Cause Dissatisfaction Due to High Fees and Commissions

Delivery apps, meant to convenience customers and restaurants, instead cause dissatisfaction due to high fees and commissions.

CHICAGO - Delivery apps have become a part of our everyday lives. They help customers get their food without needing to step out of their rooms, allowing restaurants to sell more dishes,  without worrying about occupation rates. Nevertheless, delivery apps require high delivery fees and often take commissions from restaurants.

Before the pandemic, delivery apps were not as popular in United States as they are now. However, according to the Business of Apps website, food delivery apps became one of the fastest-growing app categories in 2020.  due to the necessity of food delivery apps during the pandemic.

From April to September 2020, the top four delivery app companies in the United States earned about $5.5 billion in combined revenues, twice as much when compared to the same period in 2019. A large part of this revenue (it would be great to have the amount that this revenue represents) comes from commissions, cutting into the revenues of restaurants.

Kenny Ng, restaurant general manager at POKE POKE, located at 1100 W. Madison St., Chicago, said that delivery apps took a lot of commissions from restaurants. “Our restaurant was open during the pandemic as a carry out-based restaurant. We worked with Uber Eats, and they took 20% commission per order which is a lot. And that is why I prefer my customers to order [food] on our own website.” Ng said.

Apart from commissions, Tuan Huynh, founder of VietFive, a Vietnamese coffee shop located at 1116 W Madison St., Chicago, said that they did not do delivery due to taxes and delivery fees. “I use pickup apps, and we don’t do any deliveries yet because of the fees. There’s this huge fee [collected by delivery apps] that I don’t want to put on the customers too much at this time. Like if you get a $5 cup of coffee from me, you need to pay extra fees like $10 plus the delivery fee. On top of that, I'm in the Loop, you pay an extra 1% tax on top of Illinois sales tax. Right now we do local pickups, customers can order from our website.” Huynh said.

Some restaurant and cafe managers said they’re unhappy and some customers said they’ve complained about high delivery fees on the apps. According to The New York Time’s story, if you order a meal on the delivery app, it could be 49% higher than order the same meal at the restaurant. This could be a issue that why customers prefer to order in-person rather than using the apps.

Even though the commission fee is high, but the restaurants still offering the option for costumers to order the food on apps.

Between April 2022 and September 2022, the four delivery apps combined earned $5.5 billion.