News 4 is looking into delivery apps to see if they are putting a hidden strain on the business and consumers' wallets.
Edley's is one of Nashville's most popular spots for BBQ. When COVID-19 hit, owner Will Newman said he didn't know if they'd survive the pandemic.
"That first week or two was incredibly, incredibly scary," Newman said.
Many restaurants told News 4 they saw a surge in delivery orders from services such as Uber Eats, Postmates, and Grubhub. While he's thankful for the business, Newman said it comes with downsides.
"What most people don't understand is the financial strain using 3rd party puts on the local restaurant," Newman said.
Newman said in 2019, only 3% of his sales went to third-party delivery services. Now, due to COVID-19, they get 10%.
"It puts a financial strain to do the third party, but our guests are telling us this is what they want, so it's incumbent upon us to figure it out," Newman said.
Every time a consumer uses a third party delivery service, that money does not go to the restaurant. Due to this cost, Edley's has started its own delivery service.
Just this year, Newman said he's had to pay Uber Eats and Postmates more than $350,000 in delivery fees.
That, in turn, affects the customer, and he explained why. Take the brisket platter from Edley's, for example. On Postmates, it'll cost a customer $18, but if a person orders directly from Edley's, it's a dollar less.
News 4 found that happening not just at Edley's, but several Nashville restaurants.
In a statement to News4, a spokesperson for Uber Eats says,
"We support efforts to help the hospitality industry, which is why we continue to focus the majority of our efforts on driving demand to local restaurants, which we know is a key concern of our partners during these times. Marketplace fees paid by restaurant partners are what make it possible for us to provide the services that restaurants have come to expect from Uber Eats."
A spokesperson with Grubhub released the following separate statement:
"We have not raised our fees to restaurants, and we do not make changes to how much a restaurant pays us without first getting approval from the restaurant owner. Our platform is free for any restaurant owner who wants to join since we have a fee-for-service model. Our fees cover the cost of providing the services we do on behalf of restaurants. We send nearly 650,000 orders to restaurants a day, and restaurants have received almost $4 billion in sales from orders on Grubhub so far this year."
"Our fee structure for restaurants is a negotiable marketing fee that is typically about 10-15 percent for each order restaurants receive through our platform. If a restaurant chooses to use our delivery drivers, rather than delivering the order themselves, there is an additional delivery fee of 10 percent, which is directly used to cover delivery costs, including driver pay. Additionally, there is an ordering processing fee of 3% on each order received on our platform to cover credit card processing, fraud protection, undeliverable orders, customer care inquiries, and other support requests we handle on behalf of the restaurant."