Delivery apps adding a side dish of ‘worry’ for restaurants, customers

Feb 20, 2024, 4:23 PM | Updated: 5:11 pm

Food delivery biker...

Food delivery biker grapples with the rain. (Getty Images)

(Getty Images)

“Spice Waala” serves up flavorful, Indian street food in Seattle’s Capitol Hill and Ballard neighborhoods.

Co-owner Uttam Mukherjee says they’re opening a third restaurant in Columbia City on Thursday.

This should be a joyous time for the entrepreneur, but Seattle’s new delivery driver pay standards – and the app-based companies that use them – have served up a side dish of worry.

Delivery orders are down.

“If we compare this January 2024 to January 2023, we’ve seen a decline of 30% in our business on the third-party delivery apps, which for us – given that a large portion of our revenue comes from them – is a very steep impact to the business.”

Mukherjee said his restaurants are no longer turning a profit.

Related news: Tony Delivers provides a local alternate to food delivery in Seattle

He blamed the $5 charge that app companies like Uber Eats and DoorDash have added to delivery fees in Seattle.

For instance, “We serve a Kathi Roll for $8.50 on those platforms and suddenly the customer’s paying over $20.00 for that one roll.”

It’s a price many customers just won’t swallow.

DoorDash said it analyzed two weeks under Seattle’s new pay rules, which went into effect January 13th. It found that consumers placed 30,000 fewer DoorDash orders, and drivers waited three times longer between orders.

“We’ve seen that Seattle businesses have missed out on more than $1 million in revenue, and that’s just in the DoorDash marketplace platform,” said Anna Powell, Manager of Government Relations for DoorDash.

But she defended the fee.

“Just like with any other business, when you see the cost of business going up, you have to do something to adjust for that cost increase,” Powell said.

She said the Seattle law requires app-based drivers to make $26.40 per hour as well as 74 cents per mile and 44 cents per minute, or a minimum per offer amount of $5 dollars.

“This is not just about paying the minimum wage; it’s about paying well above that,” she said.

Related news: Food delivery business Yelloh to lay off 750 employees nationwide, close 90 delivery centers

But app-based delivery driver Kimberly Wolfe isn’t buying it.

“Oh- oh, the customers!” she says, mocking the delivery app companies, “you know we HAD to pass (the cost) onto them, and now we’re losing customers- oh woe is me,” she said sarcastically, adding firmly, “It’s all a bunch of BS.”

Wolfe helped develop Seattle’s new law.

“These app companies have been making money off of us for years,” she said, pointing out that drivers use and maintain their own cars for deliveries.

“The wear and tear on your car, the gas- all this kind of stuff. WE’RE paying for that. We are their fleet.”

She insisted it’s rare for a driver to make $26 an hour because many pickups and deliveries – from start to finish – take less than an hour.

“We’re only getting money from the time we accept the offer until the time we drop it off, and that’s it.”

Supporters of Seattle’s new law point out that app-based delivery companies are far from struggling financially.

Yahoo Finance reported that DoorDash revenue increased in the fourth quarter of last year by 27 percent year-over-year, to $2.3 billion.

Spice Waala survives on much slimmer margins.

“If we do not see an increase in sales in February itself, I don’t know if we’ll be able to sustain ourselves,” Mukherjee said.

And though she supports the new wage law, it may have put Wolfe out of work. She says the company she drives for, Shipt, has suspended service in Seattle because of it.

“We don’t want to see anybody go out of business,” said Powell, “We’d be happy to work with the city council with the mayor with stakeholders to see a new law that’s workable for everybody.”

Powell added, “Of course, we’d like to see this repealed. ”

And that – Wolfe said – is the point. “They’re doing this on purpose,” she said, “to make sure this law does not get propagated to other cities, other states. Any of that.”

According to Wolfe, the app-based delivery companies have an end game far outside Seattle’s delivery area.

Heather Bosch is an award-winning anchor and reporter for KIRO Newsradio.

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Delivery apps adding a side dish of ‘worry’ for restaurants, customers