The Problem With Delivery Apps

By: Young Kim 

Postmates, Doordash, and UberEats. These are all delivery apps that have had significant growth during the quarantine period due to the majority of the population staying at home. From the outside it seems like a win win situation. Users can stay at home while restaurants still gain revenue through a transaction fee collected by the third party delivery service. While the idea seems beneficial for all parties involved, it poses many challenges in the long term. 

The number one problem that is encountered by users of these delivery apps is the sheer cost of using them without even realizing how much those costs can add up. For example, a meal for one person can be almost double the price of what it would have been had one gone to the actual restaurant. The transaction fees plus the delivery fees plus a required tip can all add up to ridiculous markups. In extreme cases, some items on the menu of these delivery apps would be naturally marked up, taking advantage of consumer trust. Furthermore, the app could be charging the restaurant fees directly from orders taking the transaction fee, delivery fee, and a portion of the profits from the meal. So both the consumer and the restaurant are in positions where they lose. 

Another problem with delivery apps is the impact on restaurants. While having the ability to deliver orders is always good for creating revenue in a time in which customers do not necessarily want to go out and eat, the restaurant will have already taken blows to business due to having to deal with a lockdown and still having to pay fees. Furthermore, from a business standpoint they have no way of controlling brand image due to the separation from customers. These restaurants may lose long term customers because of food arriving late, delivery to the wrong address, and other problems associated with the delivery, not the restaurant. To the customer it is just a matter of putting a one star rating on the restaurant’s Yelp page and moving on with life, but to the restaurant this can prove to be devastating. There is no way to formally fix this issue either as the restaurant has no way of knowing what went wrong with the process. 

While delivery apps are a convenient way to get food from restaurants, there is a serious cost problem behind these systems. Users may believe that ordering from these restaurants is enough to support the business yet the restaurants are barely receiving any of the funds the user paid. In reality restaurants should be looking to find their own way of delivering as it is a cheaper alternative and can help with customer interaction (with social distancing efforts).