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The New Reality: Canadian restaurants in peril, delivery apps not helping: owners

Coronavirus: Are delivery apps hurting restaurants struggling to survive?
WATCH ABOVE: Two months ago, dine-in restaurants were ordered to stop welcoming guests. COVID-19 has ravaged thousands of businesses from coast to coast. Those that do remain open serve take-out meals or they're filling delivery orders. Sean O'Shea reports on their obstacles to survival.

The COVID-19 pandemic is likely to decimate the restaurant industry in Canada, according to analysts and restaurant owners who run both eat-in and take-out venues.

And instead of helping restaurants survive in a crisis, some say popular delivery apps marketed to consumers to order food during the crisis are actually making things worse.

“Every time I make an Uber delivery, I lose money,” said Nick Di Donato, president and CEO of Liberty Entertainment Group, based in Toronto.

The Liberty Entertainment Group owns several hospitality brands, including CIBO Wine Bars.

Di Donato and other entrepreneurs say Uber charges the highest delivery commission in the restaurant industry in Canada: 30 per cent.

READ MORE: Coronavirus: New delivery apps emerge as restaurants butt heads with popular services

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“Uber Eats is now in a position to dictate what restaurants may survive and which may not,” Di Donato told Global News in an interview.

Food delivery apps include names like Skip the Dishes, Door Dash and, by far the biggest player, Uber Eats.

Since governments across Canada ordered restaurants to stop seating customers for meals, a whole nation has been encouraged through television and online advertisements to help keep their kitchens open for pick-up and delivery orders.

While consumers can typically order directly from a restaurant, a more common method is to place an order through an app on a smartphone.

According to Di Donato, some apps have reduced their fee schedule since the pandemic began to help restaurants keep more of their revenue.

“Door Dash looked at the situation and said this is not business as normal for restaurants and have actually cut their rates in half. … Uber has done nothing for the restaurateur,” he said in a television interview.

First look of ‘new normal’ of dining out in B.C. restaurants
First look of ‘new normal’ of dining out in B.C. restaurants

Uber did not respond to a request for an interview for this story nor was it prepared to answer questions from Global News.

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However, in an earlier statement responding to industry protests by some restaurants during what was billed National Takeout Day, the company defended itself against criticism.

“To support our restaurant partners during this challenging time, we’re driving demand with $0 Delivery Fees on deliveries over $20 from independent restaurants. We’ve also waived activation fees, and increased flexibility so restaurants can choose from three options including no fees for pickup orders; a reduced 15% fee for restaurants who choose to use their own delivery people; or full-service with delivery people available on the Uber Eats platform,” the statement read in part.

Some owners say Uber is still too expensive during a crisis, especially when take-out and delivery is usually a restaurant’s sole source of income.

READ MORE: Restaurants may never go back to ‘normal’ after COVID-19, experts say

“The average restaurant in Canada makes approximately four per cent to the bottom line,” said Simon Benstead, who owns Marben Restaurant and The Cloak Bar in downtown Toronto.

The alternative to paying high fees to third-party companies like Uber Eats may involve a new form of cooperation among restaurants, Benstead said.

“The solution needs to be a completely new one which would potentially involve restaurants getting together as a group and potentially organizing their own system which would include technology and of course personnel to be the drivers themselves,” Benstead told Global News in an interview.

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The challenges for Canadian restaurants are steep because they expect to face tough new restrictions limiting customer capacity before they are allowed to reopen for in-person dining.

Coronavirus: Regulations for reopening restaurants in B.C.
Coronavirus: Regulations for reopening restaurants in B.C.

“We expect we will kill at least 60 per cent of the tables, we’ll remove them and the seats,” said Firas Arafat, who owns Page One restaurant located near Ryerson University.

His four-year-old venture, named for his fresh start after a corporate career, caters to students and entrepreneurs who come in to sip coffee and enjoy sweets. Some linger for hours as they work on assignments or projects beside each other on tables in the 80-seat restaurant.

But in just over two months, he’s seen the prospect of his best year ever fizzle into his worst.

“It’s a totally different game. There are no customers to attract and we don‘t how do we maintain enough revenue to support all the cost and keep staff,” Arafat said.

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He remains open for take-out customers and is loath to remove customer access to apps, even though he is paying a high price.

“I need the convenience for those customers because those are the only customers left,” he admitted.

READ MORE: Toronto restaurants boycott Uber Eats app for Canada Takeout Day

About two kilometres away, Vera Tzoulas and Chris Prifitis have decided to break away from Uber Eats entirely at their restaurant.

“And we haven’t been happier,” said Tzoulas, one of the partners in Fat Lamb Kouzina restaurant.

Now, the pair prepare and serve Greek food to consumers who have called one or two days in advance to pre-order meals with the restaurant directly. They made the move away from apps almost entirely because of the high costs, they said.

“It’s not sustainable, we can’t do that,” Priftis said as he put the final touches on a lamb shoulder meal for a customer who lived nearby.

After plating the food, Priftis and Tzoulas took separate vehicles and began delivering the finished orders to homes in the immediate neighbourhood and beyond.

No more high-commission delivery apps. For now, at least, they’re taking and fulfilling orders themselves as they try to survive.

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