Tech platforms remind restaurants there’s no free lunch

Tech platforms are taking a bigger bite out of restaurant owners’ small profits, levying taxes that leave them with less money.

November 18, 2019

Sean Gallup/Getty Images

Back in the day, restaurants had fairly predictable costs — rent, labor, pizza dough.

But, as Axios reports, a growing number of platforms are now taking big bites out of restaurant owners’ small pies of profit.

It’s always been hard to turn restaurants into big businesses…

But it’s gotten much harder now that restaurant owners also have to pay a number of services just to stay competitive.

Take food delivery. Platforms such as Uber Eats, Grubhub, and DoorDash have made it easier than ever for small restaurants to deliver food from their kitchens to their customers.

But while these delivery services let restaurants access new customers, they also charge 25% of each order (or more). 

Since well-funded services like Uber Eats aggressively recruit so many local restaurants to their platforms, restaurants often have no choice but to pay to play — or risk falling behind their competitors.

And it’s not just delivery, either…

Platforms now levy a tech tax across nearly every facet of the restaurant business, which leaves restaurants with less money in their cash registers.

Beyond delivery, here are some other services that have been disrupted by hungry platforms:

  • Reservations: OpenTable and Resy charge restaurants for reservations.
  • Filling tables: Seated charges restaurants for getting diners in the doors at off-peak times using discounts.
  • Advertising: Yelp and Foursquare charge restaurants for listings that will help eaters discover them online.

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