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How Food Delivery Apps Are Killing Restaurants

Restaurants have lost 2.3 million jobs during the pandemic, according to the Independent Restaurant Coalition. In California alone, the “leisure and hospitality shrank by 14,600, the largest job loss of any industry, as hotels and restaurants continued to suffer with the sector shedding 561,900 jobs since March,” reports the Los Angeles Times.

So, what role does our love of convenience play in the demise of our favorite restaurants?  Witness the economic boom of many big businesses including Uber Eats, GrubHub, Postmates, DoorDash and Delivery.com.  As reported by NPR, “restaurants are desperate but you may not be helping when you use delivery apps.”  While app commissions were manageable when they represented a small slice of total revenue, the pandemic has resulted in food apps taking nearly the whole pie.

As these apps start to collect 30%, 40%, 50% of a restaurant’s business, it is not incremental business — it is the business. Most consumers fail to realize that each time we order via a food app versus connecting with the restaurant directly, we are hammering another nail in that restaurant’s coffin.

The pandemic has forced many hotels to close.  Last month, Beverly Hills’ Luxe Hotel shuttered down and New York’s nearly 100 year-old Roosevelt Hotel is closing. According to The American Hotel & Lodging Association, 74% of hotels nationwide will be forced to lay off additional employees, and two-thirds of hotels won’t survive another six months without another COVID stimulus bill. With approximately 40 to 50% occupancy compared to last year, hotels are getting hit hard by the pandemic.

Provide Local Discounts

What can hospitality companies do to stay in business?  Restaurants need to broadcast that ordering direct will save both the consumer and the restaurant money.  They should create their own ‘app’ or upgrade their website so that their customers can order direct without payment to a food delivery middleman.  Alternatively, they should encourage consumers to call them directly to order a pick-up. Offering a discount or perk (like free dessert or salad) for those who order direct will also help encouraging the practice.

With travel restrictive, hotels need to pivot to the ‘staycation’ model and encourage guests to reserve directly with the hotel rather than turning to travel apps, which like restaurant apps, take a hefty surcharge.

Communication is Key

Restauranters’ and hoteliers need to communicate with their employees and stakeholders and let them know what is going on so that everyone can work together to find solutions.  Every bill can be negotiated or delayed.  People, even landlords, want to see their clients succeed. However, playing ‘duck and cover’ with delinquent invoices is not the answer. Take advantage of forbearance options provided by banks, utility companies, etc. Communicate, connect and work to resolve the invoices.

Leverage Data

Hospitality sector companies need to leverage their data.  Are they maximizing their opt-in email list to communicate with their customers?  Does their website have an easy-to-use ordering/booking functionality so that consumers can order and reserve direct?

A country without restaurants and hotels is unimaginable.  As consumers we need to do our part to order direct from our favorite restaurant and consider enjoying a ‘staycation’ at local hotel.  As the American Hotel and Lodging Association and National Restaurant Association tirelessly advocate for critical legislation to save their industries during this turbulent political season, we all need to signal our devotion and appreciation too.