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Halifax restaurants call for cap to third-party delivery service fees

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As the COVID-19 pandemic has forced restaurants to rely on delivery services. While they are convenient to the customer they are costly for restaurants. As Alicia Draus reports, there are growing calls to even out the playing field. – Jan 14, 2021

As continued lockdowns amid a continuing coronavirus pandemic force those in the food business to partner with delivery services to reach customers, restaurants in Halifax want a limit set on fees charged by those services.

The food delivery industry is growing. Between 2015 and 2020 in Halifax, food delivery increased by 75 per cent, and that’s thanks to the introduction of food delivery apps, like SkiptheDishes, Uber Eats, and DoorDash.

“Third-party delivery apps have also really become huge marketing arms, you can’t turn on the TV without seeing marketing from these third party delivery services,” said Luc Erjavec, vice-president of Restaurants Canada.

READ MORE: SkipTheDishes agrees to lowering commission for food deliveries across Quebec

“So it’s become ‘lets order from Skip tonight’ instead of you know, ‘let’s order from Bob’s restaurant.'”

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With customers favouring the delivery apps, Erjavec noted that restaurants feel the need to be on them so they can be part of the market and get business they may not have otherwise.

“Delivery is an important part of our business and, in principle, these apps can be very very positive for our businesses,” Erjavec said.

This became especially true during the pandemic. With restaurants mandated to close twice for weeks at a time, many had to find a new way of getting food to their customers. Many have turned to third-party delivery apps, but using them can be costly.

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“They’re really designed to supplement your business while you have a dining room. Unfortunately without a dining room or with limited capacity, their fees are quite high,” said Matt MacIsaac who owns both Krave Burger and Vero Pizzeria.

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Both establishments have incorporated third-party delivery services, but without their typical dine-in and walk-in customers during the pandemic, the delivery fees are a problem.

It’s a concern Erjavec says he hears from restaurants across the province.

“What they’re taking from a transaction is exorbitant.”

“Somewhere from 25-30 per cent of the sale goes to the delivery,” Erjavec said.

Erjavec gives the example of a $10 order — $3 goes to delivery. Another $3-4 can go to labour costs for the restaurant, while another $2-4 going to the cost of food, and then some of it also goes to overhead costs like rent and electricity.

“So on a $10-order, the average restaurant makes 43 cents,” Erjavec said.

READ MORE: Halifax restaurants calling out DoorDash for unauthorized partnerships

It’s why some restaurants have chosen to avoid third-party apps altogether.

Julie White is the General Manager of The Armview. During normal circumstances, the sit-down restaurant doesn’t do take-out or delivery. After the shutdown during the first wave of the pandemic, they started to do delivery but chose to pay their own staff rather than a third-party company.

“If you had no dine-in, and only do take-out and delivery and we only use one of those delivery apps, we’d be losing money,” she said.

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But many restaurants don’t have the ability to offer delivery themselves and rely on third-party services to get their product to their customers. They’re OK paying fees but want things to be fair.

“It needs to be staged in a way that the fees are manageable. Obviously, they need to make money, and we need to make money as a business and consumers need a product at a fair price,” said MacIsaac.

It’s why the Atlantic chapter of Restaurants Canada is asking the provincial government to implement a fee cap at 15 per cent. Temporary fee caps have already been implemented in other provinces like Ontario and British Columbia to help restaurants struggling during the pandemic.

Read more: B.C. places 15-per-cent cap on fees for food delivery services

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Prior to the pandemic, delivery typically only made up about four per cent of sales for the average restaurant, but now delivery makes up about 20 per cent of all sales.

“We just think it needs to be a little bit more fair, and reasonably priced,” said Erjavec of these third-party delivery apps.

“If they can do it in other parts of North America, there’s no reason they can’t do it here,” said MacIsaac.

“The political powers need to take ownership and make it happen.”