Restaurants losing money on delivery orders [View all]

EL JEFE’S TAQUERIA, a casual Mexican restaurant in Cambridge’s Harvard Square, used to generate about a quarter of its sales through home delivery. Because of the commissions paid to delivery services – apps like GrubHub and DoorDash – the restaurant barely broke even on those sales.

When Gov. Charlie Baker ordered all restaurants in the state to close their seating due to the coronavirus outbreak, allowing only takeout and delivery, El Jefe started relying on delivery for three-quarters of its sales. Owner John Schall said the delivery services, which had been taking 7 to 8 percent of his revenue each month, are now getting 18 to 19 percent. That’s an amount Schall said his restaurant simply cannot afford.

“I will lose money in April, but the delivery companies made $25,000 off of me,” Schall said. “If this problem isn’t dealt with, there will be a whole second wave of restaurant closures.”

When Baker announced the restaurant closures, which went into effect March 17, allowing takeout and delivery was seen as a way to help patrons continue to get food and help restaurants stay afloat. But since then, many restaurants are discovering that the economics just aren’t working, due to the commissions – generally 25 to 30 percent – that delivery services charge.

Read more: https://commonwealthmagazine.org/economy/restaurants-losing-money-on-delivery-orders/