Colorado restaurant owners find creative ways around major delivery apps

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Days before COVID-19 closed Colorado’s restaurants, Grammy’s Goodies hit the jackpot.

The Wheat Ridge spot was featured on Food Network’s long-running “Diners, Drive-Ins and Dives,” a show which historically provides a boost to the restaurants it highlights.

Host Guy Fieri called it “old school, American Italian, exactly the type of lasagna I’d expect to go and get at Grammy’s house.”

“He left and the world came in,” Grammy said to Denver7 on a slow Wednesday morning at her restaurant, a few blocks from the old Lakeside Amusement Park. “The world found us. We were just on cloud nine. Busy, happy, just rolling.”

Grammy (real name: Vickie Corder) paused. “Then the pandemic started,” she said, “and everything stopped. Everybody stayed home to stay safe.”

When the world pivoted to delivery, Grammy’s Goodies pivoted, too.

“We realize that people need delivery right now,” Corder said. “[But] the delivery services take advantage of the customers, and us.”

Corder posted her cell phone number on the Grammy’s Goodies web site and offered to deliver to anyone who called.

Her husband, Jeff, put his number up too. He spoke to Denver7 while making deliveries in the middle of a February snow storm.

“Business is business,” Jeff said. “So we’re willing to do whatever we have to do to make it work.”

Profitable, At A Price

Ashley Zeruto, who owns the Waffle Lab in Ft. Collins, said the delivery issues are a common topic of conversation on Reddit.

“Oddly, there’s a giant Reddit thread just about delivery services and restaurant owners,” Zeruto told Denver7 during an interview at the restaurant. “A lot of people say they just stop using [DoorDash and GrubHub] completely because it costs [the restaurants] money. They’re actually paying to use other services.”

DoorDash and GrubHub are both publicly traded. While it’s difficult to tell how much money they make from restaurant fees, we can get a sense of their size by looking at their most recent public filings.

In the last three months of 2020, DoorDash brought in close to a billion dollars in revenue. GrubHub reported more than $500 million in revenue during the same time frame.

“2020 was a transformative year for our marketplace,” said Adam DeWitt, GrubHub President and CFO, in a statement made the day of the public filings. “Strong new diner and restaurant additions across all of our markets, coupled with increased order frequency from existing diners, culminated in record gross food sales during the fourth quarter.”

Delivery’s expansion has come at the restaurant industry’s expense. 1 in 6 Colorado restaurants has closed since the pandemic began. 94,000 industry workers have lost their jobs.

An Alternative App

Zeruto continues to list the Waffle Lab on GrubHub and DoorDash. But she’s also signed up for NoCo Nosh.

The company operates in a similar way to the other delivery apps. The major differences, according to Nosh’s director of operations Nicki Bartolone, are the fact that Nosh is owned by local investor restaurants, and operated by real people here in Colorado.

On average, they also charge a lower commission than any of the major apps.

“We’re not going to be cutting into their profit margins quite as much as the bigger companies,” Bartolone told Denver7 in December.

“It’s not something that exists everywhere,” Zeruto said. “We are lucky that we can have that avenue, but a lot of people with other services, it actually costs them money to get their food out the door to customers. And the delivery services are making 30, 40% on top of other fees that are charged to the customer side of things.”

Waffle Lab is planning a second location in Boulder later this year. Zeruto credited her partnership with Nosh for providing a more profitable delivery option.

“It doesn’t sound like a lot when you’re thinking about it,” Zeruto said. “But being able to cut 15% commission going out the door is huge for us. Literally every penny counts for us at this point.”

The Denver Fee

The city of Denver tried its own tactic to control the cost of delivery. They implemented a temporary cap on the commission a delivery app can charge a restaurant.

It does not cap the fees charged to the customer.

Within days, DoorDash started charging its customers a “Denver Fee” to make up the money the company lost to the restaurant fee cap.

In a January 2021 statement to the Denver Post, DoorDash said, “Pricing regulations can cause us to increase costs for customers. … We are eager to engage with policymakers on solutions that better support restaurants, customers and Dashers.”

Denver’s temporary commission cap will expire in the middle of June. City Councilwoman Kendra Black said she does not expect to extend it.

“I think the market will end up figuring it out,” Black said. “It was just a crazy year. With so many local restaurants closing, and the ones that are open are struggling, we just wanted to offer them some kind of assistance.”

Cut Out the Middle Man

The restaurants we spoke to all said they’d stay on major delivery apps out of necessity. DoorDash, GrubHub and Uber Eats account for 93% of all delivery business in the U.S.

But they all said you should avoid the middle man if you can.

In Vickie Corder’s case, you can just call her cell.

“None of us can leave,” Corder told us. “We’re all here all the time. When you call Grammy’s, you get one of the Corders.”

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Denver7 is highlighting the restaurants who found success in unique ways during the pandemic. You can watch our half-hour documentary, “We’re Open: Colorado Restaurants Rebound” at 6 p.m. on Denver7. It will also be streaming on the Denver7 app for Roku, Apple TV, Amazon Fire or Android device.