On a blustery November night, chef Douglas Katz rings the doorbell of an old Cleveland Heights home. He carries a brown paper bag twice the size of a shoebox in each hand as he delivers food from his Middle Eastern restaurant Zhug. Under the pall of the COVID-19 pandemic, Zhug’s warm, minimalist interior stages the back-and-forth of Katz’s kitchen staff, who gingerly wrap fresh pita in tinfoil and swirl hummus into rectangular containers before topping them with curried lamb, apricots and olive oil. Recently named one of the 23 best new restaurants in America by Esquire, Katz’s duties at Zhug extend to braving the rain-slicked walkways of Cleveland’s inner East Side to hand-deliver customers their dinner at home.
“My whole thinking of this was more triage than anything else,” explains Katz. “We closed Fire [Food & Drink] and closed Zhug, and we immediately started with takeout and delivery. In all honesty, I never even thought of anything else. If someone is going to order, I want someone I know to bring it to the door. When I order something, I want someone to have some skin in the game.”
The hospitality industry has been permanently transformed by the pandemic. Cleveland has seen dozens of permanent closures, including two of the city’s gold standards, Katz’s Fire Food & Drink and Michael Symon’s Lola. For restaurants to survive in this new reality, they must rely on delivery and takeout for business, whether or not they want to — or ever intended to.
“Dine-in was always our bread-and-butter before the pandemic,” says Bac Nguyen, co-owner of Gordon Square’s Ninja City, where takeout made up for 10% of sales prior to the pandemic. “We’re more of a neighborhood location where people come to hangout.”
Like many restaurateurs, Nguyen and his partner Dylan Fallon have turned to services such as Uber Eats and DoorDash, which rely on independent contractors, as a strategy for managing delivery. While they are convenient and affordable, they bely a set of problems: An onerous fee structure and lack of accountability, governed by opaque tech giants headquartered 2,400 miles away.
“When Uber Eats first started in Cleveland, they were looking for people, and they gave me a really good rate, so it made sense,” says Anna Harouvis, owner and chef of downtown’s Good to Go Cafe and Anna in the Raw. “They kept raising their rates and taking more, until it became 33% [of each order].”
Delivery-based services like Uber Eats and DoorDash charge restaurants a commission from each order made through their service. Once a restaurant is part of Uber Eats’ network, they charge each restaurant 30% of each order to use Uber’s network of deliverers, or 15% of the total order if the restaurant wants to use its own delivery people. DoorDash does not openly disclose their fees, but a typical restaurant can expect to pay the company around 20% of each order. In an industry notorious for its razor-thin margins, a 30% commission has Cleveland’s restaurateurs wincing.
“They told me that I could just charge the customers 33% more,” says Harouvis, when she attempted to discuss this structure with Uber. “I can’t do that. I already do a luxury item, with non-GMO and organic foods. I can’t charge more than $8 or $9 for a juice.”
Since the onset of COVID, this commission fee structure has faced harsh criticism from restaurateurs. In cities such as New York and Portland, Oregon, city legislatures have mandated caps between 10% and 15% on the commissions that these platforms can charge. And in December, Cleveland City Council passed similar legislation to put a 15% cap on commissions for delivery and pickup orders during COVID.
“The biggest problem is that there’s no sustainability in the model for the restaurant,” says Katz. “When they’re taking 20% or 30% off the top, there is no profit. You’re not even able to cover some of your expenses.”
Of equal concern is a lack of transparency in dealing with these platforms, and the lack of control restaurateurs have over their product once it leaves their hands. In Harouvis’ case, customers complained orders arrived late or not at all.
“I would call Uber, and they would say that they never were picked up,” she says. “If someone said they didn’t get something, they’d automatically side with them, and we’d have to pay for the penalty.”
In Fallon’s case, communication with delivery platforms have been nonexistent.
“Now that we have signed up with Uber Eats, I find it nearly impossible to get in touch with anybody in their U.S. operation,” he says. “All the tech questions, all the order issues, all the complaints I need to have corrected are farmed off overseas into a call center.”
As these services proliferated over the last five years, they functioned as a means for restaurants who wanted to dabble in delivery to outsource the logistical and insurance problems to a third party. As a result of COVID-19, takeout and delivery are now integral for restaurants to remain in business, but the quick fix of delivery platforms isn’t what many restaurateurs signed up for.
“We tried Uber Eats as a delivery service at Fire, over two years ago,” says Katz. “We had terrible luck with them. They write the check for the delivery orders after they collect the money. It took them about 60 days for them to write us our first check, and it gave us a really bad taste in our mouth.”
Cleveland Magazine contacted Uber Eats for comment but they were unavailable.
Katz and Harouvis have found solutions by bypassing third-party delivery platforms entirely. Katz and a small team personally deliver orders from Zhug as well as his two nearby takeout and delivery-only ghost kitchens, Amba and Chimi, which serve Indian and South American cuisines out of Rising Star Coffee Roasters on Lee Road.
“We’re a small company, and I run my business as a small company,” says Katz. “The people we trust are the people I want delivering.”
Harouvis severed ties with Uber Eats more than a year ago, hiring a former Uber driver to deliver her delicacies before the COVID-19 outbreak.
“I have my own delivery because I can control it,” says Harouvis.
Still, others such as Fallon and Nguyen have taken a different approach: they weave Uber Eats and DoorDash into their business model, charging an extra 10% on orders made through those platforms — compared to orders made through the Ninja City website — to offset the fee.
“The way we approach it is that if you were only using Uber Eats, you’re pretty much just wasting your time,” says Fallon. “The way we try to make it work is a kind of combination.”
For now, it seems that the tech platforms are in a privileged position. If you’re not on Uber Eats or DoorDash, you miss out on the market of diners browsing for a plethora of options in a digital stay-at-home age. And if you utilize these services, you’re at the mercy of a platform who gets their cut regardless of whether the diner gets their order.
“This whole pandemic is going to change the way consumers shop online for food, it’s going to make it that much more competitive for restaurants,” says Fallon. “Something has to change. [The delivery services] really get the best of all aspects right now.”