Between an app and a hard place: Baltimore restaurants get temporary break on fees, but worry about the future

Ariane Tuskey’s Brazil Gourmet is a portal to her homeland, brimming with imported snacks and fresh cheese biscuits called pao de queijo. But lately, some customers might have no idea what the place looks like: They interact with it solely through their smartphones, placing orders through apps like Uber Eats and DoorDash.

At Tuskey’s Eastern Avenue cafe, such orders constitute the bulk of business — 60%, nearly triple what it was before the pandemic. Partnering with apps has helped Tuskey expand her geographical reach. Uber Eats drivers can take her churrasco and codfish croquettes as far as Towson, nearly half an hour away. But it comes with a price. Commissions and other fees can amount to more than 40% of some orders.

“We had several conversations about actually getting rid of Uber Eats,” said Keith Tuskey, Ariane’s husband.

The pandemic has changed the conversation around restaurants, putting food delivery apps at front and center. That has created a major dilemma for restaurant owners. They can keep using apps and grow their business — but pay high commissions — or skip out and risk losing orders.

“A restaurant is between a rock and a hard place,” said Ven Sriram, who chairs the department of marketing and entrepreneurship at the University of Baltimore. Three companies dominate the delivery industry: Uber Eats, DoorDash and Grubhub.

And consolidation among them — Uber Eats acquired Postmates last year while DoorDash acquired Caviar and Grubhub now owns Seamless — has created giants, making it harder for restaurant owners to negotiate individually. “A single restaurant needs the delivery service more than a delivery service needs a single restaurant,” said Sriram.

In some cases, the government has stepped in. The Tuskeys and other area restaurant owners got a reprieve this year when Baltimore’s City Council passed a 15% cap on the commissions third-party apps can charge. It’s a move mirrored in jurisdictions across the U.S., including Washington, D.C., and Anne Arundel and Baltimore counties, as local leaders look for ways to support struggling restaurants.

“Billion-dollar tech companies are bleeding New York City’s mom-and-pop restaurants dry,” New York Councilman Francisco P. Moya said after Mayor Bill de Blasio signed into law a temporary fee cap last May.

Baltimore’s app cap will end 90 days after the state of emergency expires in Maryland, whenever that might be. Baltimore Councilman Eric Costello, who sponsored the limit, said there are no plans to extend the cap beyond that point. “We were clear about that from the beginning,” he said. “This was directly tied to the emergency.”

In the meantime, the new rule is saving business owners like Dave Rather of Mother’s Grille thousands of dollars each month. “We were spending over $10,000 a month in fees,” he said of his restaurants, which include locations in Baltimore and Anne Arundel counties as well as in the city, three jurisdictions where a fee cap is in place. The caps have made the difference between losing money and breaking even.

Both Uber Eats and DoorDash have added $1.50 fees — paid by the customer — to help cover costs while a cap is in place. Regular carryout customer Brett Felter of Locust Point is just fine with that. “I’m happy to pay a higher premium to one of the apps if they have to increase their charges, if that means the restaurant and the delivery driver, too, are making more.”

Rather thinks most customers would share that perspective. He’s had customers who might order something as small as a single bowl of ice cream. By the time all the extra fees have been tacked on, “It ends up being $15,” he said. “They don’t care. It’s all about that convenience.”

Still, from the perspective of many business owners, the problem with apps is bigger than just the commissions. Restaurant owners report issues with untrained delivery drivers and feeling like they’ve lost control of their business. Some say apps have featured their food without their permission.

Jason Bulkeley of Towson’s Orchard Market & Cafe claims his restaurant has gotten negative reviews online after mistakes were made by delivery drivers for third-party apps. “They’re not professional food delivery drivers,” he said. “They sling the food around … sometimes they drive around for an hour,” he said.

Should a restaurant opt out of Uber Eats or Grubhub, companies may feature their menu anyway. In recent years, Chris Amendola, owner of Hampden’s Foraged, said both Uber Eats and Grubhub had approached him multiple times about using their services. He declined, saying that the fees were too high. Nevertheless, both companies would later feature his restaurant on their sites, using old versions of the restaurant’s menu. At one point, a customer placed an order through an app for an item that they no longer served. “It kinda caused a disaster with the guest that placed an order,” he said.

Asked about the encounter, an Uber Eats spokeswoman acknowledged the practice of including menus for restaurants that don’t partner with the app, but wrote in an email that “restaurants can opt out of the program quickly and easily.” She said Foraged had been removed from the platform in 2020.

Even with the 15% cap, Amendola wouldn’t consider using a third-party app. “I just don’t like what they’re doing to restaurants, and I don’t want to support them,” he said of the companies. Instead, he’s been offering his own delivery service, with cooks acting as drivers.

Rosalyn Vera of Cocina Luchadoras in Fells Point says she has found an alternative to commission-based apps in ChowNow, an online ordering platform that charges restaurants a set monthly fee and offers delivery through a network of partners. Vera pays the company $150 per month to use their services. “I like it a lot,” she said.

In the past year, some restaurant owners and advocates have spoken out against delivery apps for the first time, urging customers to place orders directly. Last year, Ashish Alfred, owner of Duck Duck Goose in Fells Point, urged Baltimoreans to “86 the apps” in a video posted to his Instagram page. Saying such third-party apps were “killing” restaurants, he asked diners to “delete every food delivery app that you have on your phone.”

By some accounts, their efforts are working. Byblos owner Sami Tabet said he’s noticed more customers to his Lebanese restaurant in Federal Hill calling him up and coming in person to get the food. Without the need to wait for a delivery driver, he tells them, “If you pick up the food, it’s better for you and better for us.”

Tabet described a Catch-22 situation with the apps. “You’re in a bad situation, you’re either going to sign up with them or you’re going to end up with no sales.” As soon as the pandemic is over, Tabet said, “I’m just going to cancel all the delivery services altogether.”

Experts say the pandemic-era surge in food delivery won’t completely reverse once life returns to normal.

Nearly a year since the first lockdowns went into effect, “it’s been long enough now to change behaviors,” said Dyna Boen, who analyzes consumer habits for the Michigan-based market research firm Escalent. “At the end of the day, people want touchless, they want to know that they can buy things online.”