Phil Vettel, Chicago Tribune reports:
A little more than two weeks ago, the Chicago City Council took a bite at third-party delivery-service fees, imposing a 15% cap on fees that sometimes reached 30% previously.
Tuesday… DoorDash announced the imposition of a “Chicago fee,” a $1.50 charge added to all orders placed at city restaurants.
The new fee is charged to customers, not restaurants, so is not affected by the Chicago ordinance.
Customers ordering through DoorDash saw a $1.50 “Chicago fee” added to their orders. By clicking on that fee, the following explanation appeared:
Chicago has temporarily capped the fees that we may charge local restaurants. To continue to offer you convenient delivery while ensuring that Dashers are active and earning, you will now see a charge added to Chicago orders.”
(click here to continue reading DoorDash adds $1.50 ‘Chicago fee’ in response to city’s cap – Chicago Tribune.)
A kind of fcku you to Chicago diners, I would say.
Chicago Alderman Scott Waguespack agrees with me:
“This disgraceful fee is an outright attempt to pass this IPO of $3 billion,” he said. “Just pile on more fees and pass their IPO; that’s the only thing I can think of.”
Calling it a Chicago fee might also cause customers to think the charge is a city charge, Waguespack said.
“They might think it’s the city dinging them for an extra $1.50,” Waguespack said. “It doesn’t say ‘DoorDash fee,’ it says ‘Chicago fee.’ I think that’s their intention — to stick it to the city.
“It’s that kind of vulture capitalism mentality — we can do it, so we’re going to do it,” Waguespack said. “The billions of dollars (via the IPO, if successful) isn’t enough; they have to take this too.”
Especially in light of:
The sudden onset of the pandemic in March sent the restaurant industry into a death spiral. Working in a notoriously low-margin business, many couldn’t withstand weeks of limited or no indoor dining. As a result, about one in six restaurants nationwide has closed permanently, and as of September nearly three million restaurant workers had lost their jobs.
Under pressure to pay rent and retain workers, some restaurants turned more of their attention to delivery, particularly from app-based companies like DoorDash, UberEats and Grubhub. Few restaurants that hadn’t done delivery in the past had the time or money to create their own delivery service, which typically brings in less money than dining rooms, where customers are more apt to order more profitable items like appetizers, desserts or a second round of drinks.
These restaurants have quickly found that the apps, with their high fees and strong-arm tactics, may be a temporary lifeline, but not a savior. Fees of 30 percent or higher per order cut eateries’ razor-thin margins to the bone. And a stimulus package that would bolster the industry has stalled in Congress, even as states and municipalities enact new limits on both indoor and outdoor dining.
…the fees are also funding a consolidation among the four largest players that together represent an estimated 99 percent of delivery market share and which will give them greater pricing power.
Though still unprofitable, Uber this month completed its acquisition of Postmates in a $2.7 billion deal. And DoorDash, also a money loser, is going public this week with hopes of raising more than $3 billion from investors. DoorDash’s I.P.O. will net already wealthy investors billions in profits, particularly galling as restaurants wither.
Dan Raskin, an owner of Manny’s Deli in Chicago, said his greatest frustration was the companies’ unwillingness to share customer information with him. That means he cannot verify their claims that they are bringing him new customers. Worse, they appear to be using that data to create competing virtual restaurants — which have no dining rooms, offer multiple cuisines from one location and operate only on the apps.
(click here to continue reading Greg Bensinger | Apps Are Helping to Gut the Restaurant Industry – The New York Times.)