Special Delivery: Our Report Shows How Local Delivery Services are Superior to the Big Apps

Date: 25 May 2021 | posted in: Retail | 0 Facebooktwitterredditmail
Click to read the full report.

In this report, we spotlight 20 local restaurant delivery businesses and explain why these independent businesses are a better alternative to the big national delivery apps like Grubhub, DoorDash, and Uber Eats, whose exorbitant fees and deceptive practices are killing restaurants.

Dozens of entrepreneurs across the U.S. have launched local restaurant delivery services. In Special Delivery, we profile 20 of these businesses. While each is unique, all are proving that, when it comes to food delivery, locally based businesses are better and more efficient than the big Wall Street-backed apps. They charge lower fees, pay their drivers more, and keep wealth in the community. They succeed by strengthening independent restaurants, not preying on them.

The report concludes that the major apps offer no real economies of scale. Despite more than $26 billion in revenues in 2020 — dollars taken directly from the cash registers of restaurants — DoorDash, Grubhub, Postmates, and Uber Eats continue to post sizable losses. It’s a standard monopolistic strategy: By using Wall Street’s backing to expand rapidly and lock in market share, the big apps are trying to become permanent tollbooths between restaurants and their customers. Their goal is not to create value, but to extract it.

Meanwhile, the local entrepreneurs profiled in Special Delivery are building viable businesses and doing so while supporting restaurants and keeping dollars in the community. Their business models vary. Some are cooperatively owned, either by restaurants or delivery drivers. Some deliver items from local stores as well as restaurant meals. While all charge lower fees, some earn income on both the customer and restaurant sides of the ledger, while others only charge customers. As an owner-worker at one of the businesses told us, “The whole goal is to put the money back into our pockets, back into restaurant pockets, back into the community.”

Despite the many benefits they offer, the report finds that local delivery services face a policy environment that heavily favors the big apps. Although dozens of cities have capped the fees that the big apps can charge restaurants, federal and state officials have failed to stop these companies from using deceptive and predatory tactics. This lax enforcement, combined with the massive capital injections the big apps receive from investors, is fueling the big four apps’ rapid growth. Their combined revenues are projected to grow by 59 percent by 2025, making them an even greater threat to independent restaurants.

Special Delivery begins with detailed findings about the advantages that local delivery services have over the big apps, and then explores ways that policymakers and customers can support locally based restaurant delivery services.

The second half of the report profiles 20 locally based restaurant meal delivery services. Together they offer a rich collection of experiences that can help entrepreneurs, business support organizations, and local governments create locally owned delivery services that bolster independent restaurants and build community wealth.

Read Special Delivery here.

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Follow Kennedy Smith:
Kennedy Smith

Kennedy Smith is a Senior Researcher for the Institute for Local Self-Reliance's Independent Business Initiative. Her work focuses on analyzing the factors threatening independent businesses and developing policy and programmatic tools that communities can use to address these issues and build thriving, equitable local economies.

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Follow Susan Holmberg:
Susan Holmberg

Susan Holmberg is Senior Editor and Researcher with the Institute for Local Self-Reliance’s Independent Business Initiative. She writes on corporate power and inequality and has been published in the New York Times, Time, The Atlantic, The Nation, and Democracy Journal.