Restaurant delivery apps … heros or villains? Restaurant delivery apps were the perfect solution for all of us who despise talking to customer service professionals on the phone and giving them your order six times until they get it right. These apps do more than just help you avoid awkward interactions — they act as a directory of restaurants, giving you options to discover and scroll through their menu. They ensure orders arrive, especially if it's through their own delivery drivers, and they offer different payment methods. These middleman-type apps remove an inconvenient step in the process for both sides and take a cut for their services. Sounds fair enough, right? These apps offer convenience at a cost, but some say they have begun to take advantage of their role in the food industry. The events that led to the quick rise of food delivery apps are the subject of a four-part podcast series in Land of the Giants created by Vox media food site Eater.

How the apps have become what the podcast calls a “modern day mafia”: In the US, DoorDash, Grubhub, and Uber Eats are the three biggest delivery apps, together worth around USD 130 bn. When the firms were still itsy bitsy startups, they all boasted that they were game changers for restaurants and would provide them with services to advertise and sell their products. At the time, these apps were reliant on restaurants buying into the idea and agreeing to list their names on the platforms. But things quickly changed and restaurants who weren’t on the apps became the ones at a disadvantage, especially after the pandemic made their use essential for many struggling restaurants. The delivery apps took advantage of this reversal and began charging excess commissions to restaurants while also taking a cut from hungry users.

Who bears the cost of convenience? For our last breakfast order of EGP 184 at the Enterprise office, we were charged an EGP 22 delivery fee on Talabat — approximately 12% of the total bill. This percentage changes based on location, or which party is providing the delivery driver, but it usually doesn’t exceed EGP 25. But the business model of food delivery apps doesn’t stop there, with the platforms also taking a commission from restaurants for every order that goes through — and sometimes those that don’t. Talabat charges a 15-25% commission on the restaurant’s order bill, paid from the restaurant’s profits on the sale, according to Oye Labs. In the US, food delivery apps have upped that range and charge a commission between 20-25% on every bill.

Restaurants don’t have the margins to pay the high commissions: Restaurant owners who were featured in the podcast agreed that the industry already has razor thin margins and paying these commissions has taken a bite out of their profitability.

The complaints abroad are echoed locally as well, with Creative Pan Founder and CEO Ibrahim Nagi detailing in a Linkedin post the problems that the food delivery industry causes in Egypt. We’ve also seen one too many posts while scrolling on social media complaining about the domination food delivery apps have had on local restaurants, especially about bad delivery and customer service.

So why do restaurants stick by these apps? Essentially, restaurateurs feel like they have no choice — just like with a real mafia. Gone are the days when you could distribute small menus to cars and passerbys — everything has moved online, and the platforms have the edge of a large customer base that regularly scrolls through their apps. Possibly more important than that, they have the digital infrastructure necessary to implement the process from start to finish, while also providing follow up and feedback. Not all restaurants can afford to create such a setup.

Here or abroad, the sentiment is the same: Restaurants can’t live with them — or without them.

Is there no alternative? In Egypt, fast food joints such as McDonald’s and KFC have created their own delivery platforms to control their value chain. Nonetheless, even Colonel Sanders couldn’t give up his presence on food delivery apps. Instead, the fast food chains offer extra markdowns and promotions for users on their solo app to drive people away from padding other companies’ pockets.

A better model for food delivery apps? In his post, Nagi suggests that a better business model is to introduce tiered commissions to restaurants based on the order’s total price, as opposed to having a set percentage regardless of the bill. When the order amount is small, food delivery apps don’t make much as it ends up barely covering the driver’s pay, but if the order amount is large, restaurants suffer as they cough up a big chunk of their margins. A tiered commission would result in a middle ground where all parties benefit.

Until then, the government has intervened in some cases: After a year of US restaurant owners depending on food delivery apps to keep their businesses afloat during the pandemic, the massive number of complaints led to cities and states imposing permanent caps on commissions charged to restaurants, according to Protocol. New York and San Francisco, for example, both imposed commission caps of 15%. The move did not go over well with food delivery companies who complained the government was overstepping in imposing price controls. In retaliation, the apps cut off some delivery zones and added extra charges to cover the gap, playing on a legislative loophole to ensure their bottom lines weren’t affected.

Meanwhile, their own workers were on strike: The food mafia, in this case DoorDash, was already struggling with workers going on strike over low wages back in July, NPR reported. Delivery drivers for the app, aka Dashers, were demanding that their base pay be raised. Though no action was taken, just weeks ago, the city of New York stepped in to introduce a bill that set a minimum pay for food delivery workers, and introduced other changes that would improve working conditions, according to CNBC.

How to help local restaurants? Grind your teeth and go back to awkward interactions: In the Land of the Giants podcast, restaurant owners urged people to go back to ordering from stores directly, whether from their websites or by calling their number. Using these apps, especially in places where restaurants are getting battered by the ongoing pandemic, can make you part of the problem.