
The nexus of COVID-19 resurgence in various states
and the ongoing consolidation of third-party services like Uber Eats and Gruhub comes at a particularly inopportune time for restaurants.
Whether it’s QSR giants like
McDonald’s—which recently halted dining room reopenings—or independent eateries, all will be more dependent on to-go-only business and its related expenses.
For independent
restaurants, it’s an “excruciatingly more difficult” time, says Na’ama Moran, co-founder and CEO of Cheetah, the San Francisco-based food ecommerce platform.
On the
big-get-bigger side of the third-party ordering/delivery scene, Uber Eats parent Uber Technologies this week announced its intention to acquire Postmates for $2.65 billion. That came on the heels of
news that Grubhub will merge with Just Eat Takeaway.
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Despite their considerable scale, big QSRs have been struggling with limited menus, the added expense of to-go meal packaging and
third-party fees during the pandemic.
While chains like McDonald’s have long relied on several third-party services, others are still experimenting—particularly those for whom
delivery hasn’t been a big priority.
Darden Restaurants—whose holdings include Olive Garden, LongHorn Steakhouse, Yard House and The Capital Grille—recently tried third-party
delivery for Yard House, but isn’t convinced it makes financial sense.
“Our own to go-business actually grew faster than the third-party business in those restaurants,”
Darden CEO Gene Lee told analysts on a June 25 conference call.
“Now, as we've said all the time, that can change…if we see that those margins are equal to what we do today. Then
maybe we'll go into the third-party model.”
Profit margins have become more of a focus for companies like DoorDash, Grubhub and Uber Eats because many cities have begun to cap
commissions—generally in the 20% to 40% range—that they charge restaurants. In May, New York limited third-party delivery service fees to 15% per order.
“There is already a
lot of government pressure on these platforms’ commissions, which is very likely what’s also driving this consolidation,” says Cheetah’s Moran. “I think if they are left
to their own device, they will get worse because they need to monetize what is a very expensive infrastructure.”
About five years ago, Cheetah was launched to provide food and supplies
to independent restaurants for next-day delivery. When the pandemic set in and restaurants began to shut down, the company began selling its goods to consumers via the Cheetah For People mobile
app.
Now, Cheetah is enabling restaurants to offer prepared food for delivery without charging the typical delivery commission—just a 3% credit card fee.
“We don’t
take any fees from the restaurants because we are pre-monetized by selling restaurants their ingredients,” says Moran.
Cheetah is experimenting with offering plans through which people
could order multiple meals for more than just one day.
“This is a much better option for restaurants, because it gives them predictability over inventory,” says Moran. “I
think this is part of the transformation of restaurants that we are looking to support and accelerate.”
Consumer research from Frank N. Magid Associates shows many people were hesitant
to return to in-house dining at cafes, bars and restaurants even before the new resurgence of COVID-19 infections.
Magid conducted two online surveys of 2,000 respondents ages 18+
between April 7 and June 7. More than half of those surveyed agreed strongly/somewhat with eight statements regarding the potential for becoming infected.
The biggest concern—cited by
62%—was shared public bathrooms, followed by not trusting others to wear masks (58%), a limited amount of indoor physical space (57%) and the perception that “dining at restaurants creates
an environment for spreading the coronavirus,” cited by 56%.