No deal, no delivery? Contact 6 investigates food delivery platforms

MILWAUKEE - Restaurants are making deals with delivery service providers to survive the pandemic. But as Contact 6 found out, having no deal doesn’t always mean no delivery.

If there’s a long line at your local lunch spot, chances are it’s not at the counter. These days, many orders are being placed online.

Customers will pay more for the convenience of delivery, but how much more? And, what’s your restaurant’s cut?

Contact 6 wanted to find out, so we met up with food blogger Nick Chipman of DudeFoods.com. Chipman often orders his food in.

We placed the same order from Cousins Subs for a 7 1/2 inch club sandwich and regular curds with three delivery apps: GrubHub, DoorDash and Uber Eats.

"DoorDash and Uber Eats had pretty much the same costs," Chipman said. "GrubHub took the longest and charged the most."

The charges for DoorDash and Uber Eats delivering our meals before tip were within a quarter of one another, about 57% more than if we’d ordered inside a Cousins Subs location. DoorDash waived its $2.99 delivery fee for our first order so Contact 6 added the fee back in for its cost comparison.

GrubHub’s charge was 77% higher before tip than if we’d ordered in the store, partly because it charged a $2.00 small order fee. Grubhub’s order took the longest to arrive and Contact 6 discovered there was a reason for that: Cousins Subs was unaware GrubHub was delivering its food.

"We did not have a relationship with them," said Justin McCoy, Vice President of Marketing for Cousins Subs. "It's not the first time that we've faced that."

Delivery apps listing a menu without a restaurant’s knowledge has become a common issue in the industry. Recently, Ian’s Pizza in Milwaukee asked that if be removed from Uber Eat’s platform.

A class action lawsuit filed by restaurants against GrubHub claims that delivering without an agreement implies a business relationship where there is none and confuses customers. California tackled this problem by passing new law that prohibits "delivery of an order from a food facility without first obtaining an agreement."

So, how are delivery service providers doing this without an agreement in place?

"They'll place an order by phoning in," said McCoy. "They collect the money and then pay us. Then they'll collect their money on the other side."

In responding to Contact 6’s findings, Cousins Subs asked GrubHub to remove its menu from the platform. GrubHub agreed. McCoy says it’s the third or fourth time they’ve asked GrubHub to do so.

"We have a legal right to our trademarks and products," said McCoy. "When we have an agreement, we try to put standards in place for that transaction."

Cousins Subs has agreements with other delivery service providers including Uber Eats and DoorDash. So, how much money from those orders actually went to Cousins?

"First off, all the fees go to them [the delivery service providers]," said McCoy.

McCoy says Cousins Subs has control over the menu items listed on the platforms and the pricing.

"Through negotiating work, you can do some slight marking up that can offset some of those fees for you," said McCoy.

If prices on a delivery platform are higher than in the store, Cousins Subs likely negotiated raising them to offset fees.

That said, a chain like Cousins Subs has more negotiating power than a smaller mom-and-pop shop. Even so, McCoy says it benefits their business when customers order directly from Cousinssubs.com. https://www.cousinssubs.com/order/category/21189

"We want everyone to order from Cousinssubs.com, versus ordering through the DSP [delivery service provider]," said McCoy.

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Still, McCoy says they’re in a "comfortable position" with the delivery service providers their business has agreements with. After all, a huge uptick in food delivery is one reason their business is strong, despite the pandemic.

GrubHub tells Contact 6, it adds restaurants to its platform in response to demand, something other food delivery companies have been doing for years. GrubHub supports banning deliveries from non-partners because that would ensure a level playing field.

Statement from GrubHub spokesperson

"We believe partnering with restaurants is the only way to drive long-term value in this business and support banning this non-partnered practice for all companies to ensure a level playing field. 

Starting in late 2019 in select cities across the country, we've added restaurants to our marketplace when we see local diner demand for delivery so the restaurant can receive more orders and revenue from deliveries completed by our drivers. This is a model that other food delivery companies have been doing for years as a way to widen their restaurant supply, and we’re using it as well in some markets to create a level playing field. We work to provide accurate menus and hours for these restaurants on our marketplace based on available information online.

If a restaurant prefers not to be on our marketplace or needs to change any information like menu items or hours, they should reach out to us at restaurants@grubhub.com, and we'll work as quickly as possible to make necessary updates or remove them."

Grubhub has consistently proven to offer the lowest diner-facing fees in the industry, allowing our 30 million diners to order from more than 300,000 of their favorite local restaurants at an affordable cost. The fees you observed at Cousins Subs make it an outlier, as our diner fees are typically no more than a few dollars. We also offer Grubhub+, a monthly membership program that includes free delivery, for diners who would like to avoid fees.

Diners may see the following fees when ordering:

A delivery fee that is determined by multiple factors, including the distance from the restaurant to the delivery address and whether the restaurant has a partnership with Grubhub. The delivery fee helps us cover the cost of paying drivers, performing driver background checks, and maintaining our delivery technology.

• A service fee that is a percentage of the subtotal and helps Grubhub cover operating costs.
• A small order fee on orders with a subtotal smaller than $10.

Response from DoorDash to Contact 6’s email

Consumers on average pay $3-$10 total per DoorDash order on delivery and service fees if they don't DashPass.

As a reminder, DashPass is $9.99/month (no strings attached, you can cancel at any time), and you get unlimited $0 delivery fees and reduced service fees on all orders over $12. 

And we have 390,000 merchants on our platform. 

Here are some helpful links:

• https://blog.doordash.com/understanding-merchant-fees-cbdfe057d15c
• https://help.doordash.com/dashers/s/dasher-pay-model?language=en_US
• https://www.sec.gov/Archives/edgar/data/1792789/000119312520304953/d752207ds1a.htm#rom752207_10

Uber Eats’ responses to Contact 6 question

• Delivery fees vary for each restaurant based on things like location and availability of nearby couriers. You’ll always see the delivery fee before placing your order
• Service fees equal 15% of an order’s subtotal, subject to a minimum of $2
• Uber collects all fees and uses them to pay delivery people as well as other costs. 
• The majority of the cost a customer pays goes to the restaurant and the delivery person.
• Prices listed for menu items listed on Uber Eats are in the control of our restaurant partners. 

Summary of Contact 6 test

DoorDash

Delivery time: 16 minutes

Store: 2260 N. Grandview Blvd, Waukesha

Delivery distance: 2.5 miles

Costs:    Cheese curds: $4.01

               Club sandwich: $8.04

               Tax: $0.68

               Delivery fee (if un-waived for first use): $2.99

               Service Fee: $1.57

               Dasher Tip: $4.00

               Total before tip: $17.29

UberEats

Delivery time: 35 minutes

Store: 2260 N. Grandview Blvd, Waukesha

Delivery Distance: 2.5 miles

Costs:    Cheese curds: $4.01

               Club sandwich: $8.04

               Tax: $0.83

               Service fee: $2.00

               Delivery Fee: $2.49

               Tip: Paid separately

               Total before tip: $17.37

GrubHub

Delivery time: 36 minutes

Store: 1350 Capital Drive, Pewaukee

Delivery distance: 6.5 miles

Costs:    Cheese curds: $2.99

               Club sandwich: $5.49

               Tax: $0.92

               Delivery fee: $6.49

               Service fee: $1.53

               Small order fee: $2.00

               Total before tip: $19.42

In-store

Costs:    Cheese curds: $3.49

               Club sandwich: $6.99

               Tax: $0.52

               Order total: $11.00