New Orleans DoorDash allowed sources to whisper to the Wall Street Journal that they were preparing to go public and cash in from investors despite losing money in its business. They need to hurry, because reality is starting to catch up with all of these predatory food delivery operations. Their workers are organizing in reaction to low wages, bad working conditions, and misclassifications. Restaurants are protesting in New York City and elsewhere about the ways that delivery services rip them off on fake trips and general price gouging. Who is benefiting other than these platform app-companies, their founders, and angel investors? If it’s not their workers or their suppliers, is it their customers?
It doesn’t look like it from a story in the New York Times called “Delivery App Fees Leave a Sour Taste” by Brian Chen. In a bit of not-so-secret shopper work, Chen priced the cost of ordering a meal at Subway and Panda Express and comparing the pricing of four delivery services Grubhub, DoorDash, Postmates, and Uber Eats. Trust me on this. If you have never used one of these delivery apps, don’t start now unless you just won the lottery. If it’s on your phone, swipe and wipe that baby off of it now! The markups were absurd!
Uber Eats was the worse and Postmates a solid second on a Subway order that jacked the bottom-line price using Uber 91% and Postmates rolled the customer for 62%. I know you’ve eaten at Subways, so don’t lie to me, since we all have. On two small turkey sandwiches which would have cost New York’s Chen $13.21, Uber hit him up for $25.25 without a tip with a range of fees. They charged him $3 bucks, because it was a “small order.” They added a 15% service fee and then a $3.99 delivery fee. Yes, we would think that the delivery fee was in fact the service, since that is the only value that Uber is adding, right? But, maybe the 15% bite was the service in which case what was the other $3.99 other than pure and simple rent-seeking as the economists call it. Postmates on the Subway order charged only $2.99 for the delivery fee but went long on the service charge at 16.4%, probably figuring that none of the customers could do the math in their heads, but would be fooled by the lower so-called delivery fee.
These national chain food services are adding a takeout fee of a couple of bucks as well, which some of them can get away with, but small outfits end up losing money on these deals. ACORN Global Enterprises doing business as Fair Grinds Coffeehouse tried Uber Eats, but bailed quickly during the trial period before having to start paying the monthly participation fee and buy the iPad, because it was clear we would lose money on each order, and Uber had no way to really bring us customers as they claimed or keep the coffee and food hot enough to make our customers happy. No surprise that small outfits in New York City are banding together to fight the fees.
Chen found the costs even crazier at Panda Express where a family-size order of Chinese food that with sales tax would have run $42 saw a fiver on top from Panda Express and then markup from the four companies from 37% at the low from Grubhub to 49% at the high from Uber Eats. His message was either go to the restaurant itself because now it “looks like a bargain” or eat at home.
Why are people allowing themselves to get ripped off like this by these app-scammers? Let’s try to figure this out before they show up at your door.
Wade Rathke is founder and chief organizer of ACORN and ACORN International. You can find Wade’s recent past posts here Chief Organizer Reports. And you can link to his website here Chief Organizer ACORN/ACORN International