Food delivery and fees in New Haven

A look at how restaurants have tried to navigate a difficult relationship with delivery services.


Staff reporter


Khuan-Yu Hall, collaborating photographer

Like using food delivery services leaps during the pandemic, some restaurants have struggled to cope with fees imposed by big companies like DoorDash, UberEats, GrubHub and Snackpass.

Over the past two years, delivery services have enabled citizens, whether contagious with COVID-19 or concerned about exposure to the virus, to patronize local restaurants from home. Since last week, Yale has started handing out tens of thousands of dollars worth of GrubHub and UberEats vouchers for isolated students. As restaurants have faced lockdowns and capacity restrictions, delivery services have offered businesses an additional revenue stream.

“It’s a trend that everyone was heading towards, but the pandemic itself has accelerated that process,” said House of Naan owner Harry Singh. “During the pandemic, these apps have enabled restaurants to make their food easy and accessible to customers and people sitting at home.”

Naitza Diaz, operations manager at Sherkaan, an Indian restaurant across the street from Ezra Stiles College, noted that Sherkaan has been forced to shift mostly or entirely to takeout at times during the pandemic. Today, even though restaurants have opened, orders through third-party apps still account for more than a third of orders at Sherkaan. In fact, products like halal delivery is becoming more and more common.

At the start of the pandemic, Sherkaan started delivering food himself to keep up with delivery orders and keep staff employed. Using its own drivers has also allowed the restaurant to reduce the costs charged by delivery services.

According to Diaz, fees vary from platform to platform, but can take a commission of 20-30% of the final sale. Diaz added that “those fees are quite high, especially in an industry where it’s not a very high profit upfront. These fees can somehow make or break you.

Singh agreed with Diaz, saying that in order to stay alive, “restaurants have no choice but to increase their food supply.” He noted that “ultimately it only impacts the consumer.”

As delivery services, “a necessary evil” as described by Diaz, have become an important and seemingly permanent facet of the restaurant industry, restaurants have embraced creative solutions to ease the burden of their costs.

According to Diaz, other restaurants have reduced their menus, replaced some cocktails with a cheaper liquor or made their dishes less expensive. Others have even attempted to reshape the city’s food delivery market by launching a local service, Haven of food.

Founded in 2019 by restaurants on the shoreline around New Haven, according to Nosh Haven Development Manager Stephen “Finn” Yaeger, Nosh Haven is a restaurant-owned delivery service that aims to offer its service at the lowest cost to everyone involved.

“Our model is built on creating real partnerships with restaurants and communities,” Yaeger said. “Because our goals are…to change the industry and create a sustainable way for restaurants and businesses to deliver quality to internal and external customers.”

Although Sherkaan was approached by Nosh Haven, he declined the partnership, citing concerns about the sustainability of lower fees and much lower usage of Nosh Haven compared to other services.

Unlike Sherkaan, House of Naan joined the new service. After six months with Nosh Haven, Singh pointed out that the platform charges lower fees, works better with restaurants, and prevents New Haven companies from being held hostage by larger corporations.

Singh told the News that even small fees can seriously hurt local businesses in the long run. He cited GrubHub, noting that they charge a “marketing fee” to the restaurant. The higher the fees paid by the restaurant, the higher the business is listed on the app interface. Singh also noted that restaurants that pay lower fees might not be reimbursed for errors made by GrubHub drivers.

“Because there are more customers consuming through GrubHub,” Singh said, “restaurants are kind of stuck because if we’re not on the GrubHub app, we lose business, but we have to to pay percentages based on what GrubHub wants….It’s not about what’s fair….It’s what GrubHub wants, and if we don’t follow their rules, we’ll be pushed to the curb .

In response to concerns raised by Diaz, Yaeger said Nosh Haven has continued to grow by word of mouth, maintaining margins they are comfortable with.

“Nosh has had some nice strong growth,” Yaeger added. “Honestly, I don’t see other platforms as threats; they absolutely have millions of dollars in marketing to secure customers and businesses only to overcharge and underdeliver.

To date, Nosh Haven has partnered with 32 restaurants in New Haven.

KHUAN-YU HALL




Khuan-Yu Hall covers business, labor and economics. He is a freshman at Davenport, from Hartland, Vermont, studying ethics, politics, and economics.