Since the pandemic began, the rising popularity of food delivery apps has magnified the financial hardships in the restaurant industry. Senior Researcher and local development expert Kennedy Smith joined The Morning Show on Wisconsin Public Radio to talk about how the largest, Wall-Street-fueled delivery apps are using their market power to extract ever-increasing profits from restaurants.
“Restaurants already have thin profit margins,” Kennedy explained, and with delivery apps charging upwards of 30% or more of each meal, restaurants face a serious financial threat. Customers often believe that by using a delivery app they are supporting their local restaurants. But these dominant app services are extracting profit, intercepting customer data, and tarnishing the reputations of restaurants by listing them on websites without their permission or knowledge.
Kennedy reveals that there is no incentive to use a big delivery app over a locally operated one. “It is a one-on-one transactional business. There isn’t a benefit for a restaurant to use DoorDash versus one that is locally owned.”
Communities across the country understand this, and are more are utilizing their resources to establish their own local delivery services. For example, a coalition of restaurants in Lexington, Ky. developed their own local delivery cooperative, which provides drivers health insurance, profit sharing, and eventual co-ownership. Kennedy asserts that “Local platforms really adapt their services in innovative and novel ways to each community’s needs and its personalities.”
Listen to the radio show here.
Read Kennedy’s report — Special Delivery: How Local Delivery Services are Superior to the Big Apps.
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