Off the Kuff Rotating Header Image

UberEats

On capping restaurant delivery app fees

Fine by me, but I’ll bet more than fifteen percent of my most recent delivery tab that this does not go anywhere.

Rep. Carl Sherman

High delivery fees by third-party apps, such as DoorDash and Uber Eats, are often cited by restaurant operators as a source of financial strain, especially during the coronavirus pandemic. A new bill filed in the 87th Texas Legislature is seeking to cap the fees food delivery services charge restaurants at 15 percent.

The industry standard hovers around 30 percent of a customer’s order, depending on the platform. This would be significantly reduced across the state if the bill passes.

“This is one of my wishes for 2021,” says Alex Au-yeung, the chef and owner of Phat Eatery in Katy.

Au-yeung used Grubhub, DoorDash and Uber Eats at one point, but he got rid of them even before the pandemic. Phat Eatery now operates its own delivery system. With razor-thin profit margins, a fee that high is untenable for restaurants, he says: “If you give 30 percent away, how can we survive?”

Rep. Carl Sherman Sr. introduced H.B. 598 in the House after he heard from restaurant owners in his DeSoto-area district that the high delivery fees were creating hardship for their business.

“The impact of COVID exacerbated the problem,” Sherman says. With dining rooms closed, then reopened at lower capacity, restaurants had to rely on takeout and delivery, often turning to third-party apps. “They were unable to factor in the levied costs from these delivery services,” he says.

Chef Justin Turner closed all four locations of his popular Bernie’s Burger Bus restaurants this year. While he said there were many factors at play, high delivery fees were one of them. Turner signed up for the services because he saw the convenience of delivery become increasingly popular with customers. He said representatives for the companies told him he would see an increase in business by being on the platforms, but he hasn’t found that to be the case. Instead, Turner noticed sales simply shifting away from dine-in to carryout over time. The pandemic made this worse.

“People want the convenience,” Turner says. “Especially in a COVID world, being able to get food dropped off at their door without talking to a person or touching a person.”

Turner adds that these fees also affect the customer. He’s already seen some restaurants increasing to-go prices to make up for the high commission from delivery apps. In his opinion, most food doesn’t travel that well, so people are paying more money for lesser quality than is offered by dining in person.

[…]

Besides the high commission, Au-yeung had other gripes about the delivery apps. His team couldn’t communicate directly with people ordering through the platforms, which made the restaurant’s mission of great customer service impossible. And while he made the decision to leave DoorDash, he found it impossible to take Phat Eatery down from their website. He says he’s tried to contact the company, to no avail. To turn people away from ordering through the app, he edited the menu items to read “Do not order here.” He also jacked up the prices to discourage people.

One service Au-yeung likes, though, is Favor Fleet, an offshoot of the local delivery app now owned by H-E-B. If the restaurant is busy and short-staffed for deliveries, he can request drivers from Favor Fleet on-demand, for a flat fee of $7.50 per order. “That, I can deal with,” he says.

Turner says he favors the bill’s passage but is skeptical about its chances in the Legislature.

“I don’t think, with two publicly traded companies and lobbyists, that this is going to make it further,” he says. “You’re asking them to cut their profits, that they’ve been making for a long time now, in half.”

I suspect that is absolutely correct. This will be smothered by lobbyists before it ever has a chance to breathe. It’s still worth bringing up. Personally, I never use delivery services for takeout. I pick it up myself, which is the only way I can be sure that the money I’m spending goes entirely to the restaurant. It helps that 90% of the time I’m ordering from a neighborhood place, but still. And when this damn pandemic is over, I’m going back to dining in most of the time. Restaurant food tastes best when it’s right out of the kitchen, and no amount of convenience makes up for that to me. Your mileage may vary.

Uber’s vision for the future

I feel like this is more wishcasting than real planning. Still, some of it may happen, and if nothing else we should be aware of what it’s all about.

When Uber envisions the future, it not only wants to put urban air taxis and drones in the skies. It also wants to transform how people navigate cities and how they live in them.

Uber CEO Dara Khosrowshahi said the San Francisco-based tech company wants to turn today’s cities that are getting denser and more polluted into “cities of the future that are fundamentally green and built for people.” To do that, he said, cities need transportation options that range from cruising down the street on an electric scooter to commuting through the skies.

“We want not just to be the Amazon of transportation but also the Google of transportation,” he said.

One of the first places Uber wants that to play out is Dallas-Fort Worth: It’s one of the first three markets for Uber Elevate, an initiative to launch the aerial ride-sharing service.

[…]

Uber gave a progress report and made splashy announcements at its third annual Uber Elevate Summit. It announced the first international market for the air service: Melbourne, Australia. It revealed that Uber Eats is working with McDonald’s to deliver Big Macs and fries by drone. It touted the progress of six aviation companies that are designing the aircraft. And it dived into specifics, such as economics, safety and FAA-required certification. It showed off its different modes of transportation, from its new self-driving Volvo SUV to electric scooters.

Through splashy presentations and showroom floor exhibits, Uber and its business partners tried to build the case that urban air taxi service is not a far-fetched idea but one that’s coming to fruition.

Uber went public in May. The tech giant’s growth has been fueled by venture capital, but it is spending billions of dollars and has yet to turn a profit. That hasn’t slowed development of its aerial ride-sharing service. It expects to start flight demonstrations next year and launch commercial service in a few cities, including Dallas, in 2023. Eventually, it wants the urban air taxis to become autonomous.

Mark Moore, Uber’s director of engineering for vehicle systems, said he’s already seen some of the aircraft take flight. He declined to name the companies that are flight testing, saying they’re keeping quiet for competitive reasons.

“It’s incredibly impressive,” he said. “They’re nothing like helicopters.”

We first heard of Uber Elevate back in 2017. They had a goal at that time of rolling out a demo in 2020, so as far as their public pronouncements go, they’re on schedule. There re other operators in this space, one at Texas A&M that is working on flying motorcycles, with a test date of 2020, and a different kind of flying vehicle, based on battery power, that is farther away from reality. Beyond those two, we’ll just have to take Uber at their word that there are other companies testing prototypes now.

The challenges are not just technical.

Moore said the next four years will focus on demonstrations that “prove out the safety, noise and performance” of the vehicles.

In 2023, he said it will launch to paying customers in Dallas — but with a limited number of vehicles and limited operations. He said he expects five aircraft per manufacturer at launch. That will grow to about 50 per manufacturer in 2024. But, he said, some manufacturers may not be ready in time.

In Dallas, the average trip is expected to be 20 to 25 miles, Moore said.

But one of the major questions is whether Uber can win over regulators and the public. Unlike other tech innovations, early adopters won’t just use a new kind of technology. They’ll fly in public, so that affects the people driving, walking or living on the ground below, whether or not they choose to opt in.

[…]

“Uber is obsessed with making these vehicles as quiet as possible,” he said.

The Federal Aviation Administration’s acting administrator, Dan Elwell, said he’s enthusiastic about urban air taxis but acknowledged that their development gives him more to worry about.

“Everyone is riveted by this, especially me, but then I put on my FAA regulator hat and I got a whole new bucket of stuff to lose sleep over,” he said in a speech at the summit. “What you see is the ideal way to transporting people across cities. When I look at it, I see car-sized vehicles with multiple rotors hanging over dense urban populations.”

All that was discussed in the first Uber Elevate link I posted above. Noise is also a concern – much is done to abate highway noise for residences, but the only way to do that for aerial vehicles is to make the vehicles themselves as quiet as possible. How t ameliorate the “death from above” concerns, well, that’s going to be a key question. All this from a company that burns money faster than 747s burn jet fuel. I’ll keep an eye on this, but don’t be surprised if the next major update is that the timelines have been pushed back.

Amazon PrimeNow restaurant delivery debuts in Houston

More good news for people who like having other people bring them their food.

Amazon

Announced via release, Amazon PrimeNow will offer one-hour delivery for Prime members from dozens of restaurants across the city. Which means that you’ll not actually have to visit the restaurants to enjoy food from The Hay Merchant, El Tiempo Cantina, Hugs & Donuts, and more.

Unlike other delivery services, whose fees range from $2 to $7 per delivery, PrimeNow deliveries will be free for those that have paid the $100 for Amazon Prime perks. Notably, Amazon will not mark up menu items’ prices, which other services are unabashedly guilty of.

PrimeNow delivery is officially available in Houston as of today. To see if it’s in your area, you’ll have to download the PrimeNow app and look for a “Restaurants” option.

As noted in the story, Amazon joins UberEats and some other services in the dinner delivery business. I personally prefer to dine in, mostly because I like my food hot from the kitchen; the only to-go/delivery food we get with any regularity is pizza. I know that a lot of people do like this sort of thing, and I’m sure this will be something they really like. If you’re one of those people, you now have one more reason to not leave the house.

UberEats expands

Good news for those of you who like having food delivered.

Uber

A larger section of metro Houston now can use Uber’s meal delivery service seven days a week and with more dining options through a new app.

A new UberEats app, separate from the Uber ride-sharing app meal ordering customers have used, launches Tuesday.

“Houstonians have embraced UberEats, but we also know that with a separate app, we are able to give users a better experience,” said Sarah Groen, general manager for UberEats Houston.

As of the app’s launch, 100 restaurants are participating. More are being added to the list, Groen said.

The service’s operation hours have been extended beyond midday weekdays to daily between 10 a.m. and 10 p.m.

Users will be able to browse menus and order food from participating restaurants, and track drivers bringing their food. The service area has expanded beyond downtown and Midtown, and now includes the Galleria area, The Heights, Montrose, Rice Village, West University and Upper Kirby.

Those areas have shown large demand for UberEats, where the company has received many requests from people asking for service, Groen said. In January, the company did test runs in the new areas and registered high demand.

See here for the background. I’m still not the kind of person who likes to order food for delivery, so I’m still not in their market. But if you are, and you live in these areas, then these are good days for you. The Houston Business Journal and the Houston Press, both of which have maps of the expanded service area, have more.

UberEats

Some new food delivery options, at least for some people.

Uber

Uber will expand its presence in Houston this week with the local launch of its meal-delivery service, UberEats.

Beginning Thursday, Houston becomes the second city in Texas and the 10th in North America where Uber drivers will deliver meals. Customers in downtown and Midtown can use the Uber app to select from a list of 60 participating restaurants and place orders, said Sarah Groen, general manager of UberEats Houston.

After customers order and pay through the app, the company says an Uber driver will arrive with the food – already in the car in temperature-controlled containers – within 10 minutes.

“We keep that geography fairly small to make sure we can deliver on that promise of 10 minutes or less,” Groen said.

[…]

Several app-based and online food delivery services already operate in Houston and for longer hours. They include GrubHub, Favor and DoorDash.

Groen said Uber Eats differs because of its changing menus. Some participating chefs are creating specific meals for UberEats.

I have no feel for how big a market there may be for something like this. We cook or we eat out – even when we order a pizza, from Pink’s here in the Heights, I pick it up. If you’re the sort of person that is into this sort of thing, then this is good news for you. We’ll see if there are enough such people to make this a success.