Third-party firms such as Uber Eats, SkipTheDishes and DoorDash will now be limited in terms of how much they are allowed to charge Nova Scotia restaurants for using their delivery service, something local restaurants hope will rise in profits.
“If we’re not making money through these national third-party apps, it’s a really frustrating way to do business,” said John Scott, the co-owner of Steak And Stein in Halifax.
On Wednesday, the N.S government announced a 15% cap on fees bars and restaurants pay for third-party deliveries and a 10% if customer uses a food delivery app to order.
Luc Erjavec, Atlantic vice-president for Restaurants Canada, said the new cap will definitely help restaurants increase their profits.
“This will put thousands of dollars back into the pockets of operators at a time when they’re losing money, struggling to survive, accumulating debt. This is a big deal,” said Erjavec.
‘We’re just not seeing the extra money’
The change, which rolled out on Wednesday, is being enforced under the Emergency Management Act and will go on till the state of emergency ends.
During the COVID-19 pandemic, different restaurants throughout the region have chosen to use apps to deliver their food, and some say they are being charged a lot of money.
Cindy Wheatley, the owner of Boneheads BBQ on Barrington Street in Halifax, said whereas they’re grateful for the customers they get through apps, utilizing those services to order makes things quite more difficult for restaurants.
“We’re just not seeing the extra money. The profit margins are so low already, when the apps take their large cuts up to 30 per cent, it really hurts,” said Wheatley. “By the time we pay those fees, we’re not making any money on those orders.”
Smaller, local options for delivery
HaliHub, an independent food-delivery business bases in Halifax, said those apps charge restaurants up to three times more than it does to deliver.
“We’ve got a network of about 40 drivers throughout the [Halifax Regional Municipality]. With our local services, we recognized earlier on that in order for restaurants to survive through this pandemic, they had to be able to deliver their product at a cost that works for them,” said Brian MacDonald, who runs HaliHub.
With a small, four-person office, he is able to charge fees as low as 9% and still make a profit. Scott said the number of persons of people ordering via third-party apps has drastically risen since prior the pandemic when those orders only represented 5 to 8% of the business Steak and Stein received.
“Today, third-party apps cover about 50 to 75 per cent of our business when we’re closed [to the public], and 25 to 30 per cent when we’re open,” said Scott.
Scott said they have not been able to turn a profit during the pandemic using third-party delivery apps, and he is confused as to why local restaurants appear to be charged a lot more than bigger chains.
“It’s just not fair when I know some of the larger chains like McDonald’s and Burger King and so on, they get charged a 10 per cent fee,” said Scott.
He said the 9% fee charged by local delivery services such as HaliHub is a “survivable rate.”
Fees cover operating costs
Uber Eats Canada told the media in an email that its fees cover operating costs, and it will keep the charges capped till told otherwise.
“We are compliant with these measures. Like our restaurant partners, we look forward to a time when restrictions are lifted, enabling restaurants to return to dine-in as a main revenue channel,” Uber Eats Canada said.
SkipTheDishes and DoorDash told the media through email that they were disappointed not to be consulted on the new cap plan.
Wheatley said she welcomes the cap announcement, but has questions regarding how it will be enforced.
“It’s a really good thing. I kind of wish it would have happened a little bit sooner,” she said.
Scott said he does not see online ordering disappearing any time soon, so he is leaning more toward using local delivery services.
“It’s something we’ve been highly advertising and marketing to make people aware what’s available, local and more sustainable,” said Scott.