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Delivery apps can take bite out of restaurants' profits, quality control

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KANSAS CITY, Mo. — Considering many people are still unsure about eating out, food delivery apps continue to be popular options.

But nationwide, they're not always as popular in restaurant owners' eyes.

For example, Waldo Thai on Wornall Road in Kansas City, Missouri, doesn't use any of the apps, despite being approached by DoorDash, Uber Eats and Postmates to work out agreements.

"We lose our quality control," Waldo Thai General Manager James Chang said. "If there are any issues that rise from the food delivery, we are usually the ones that get called."

The other big roadblock for Waldo Thai is the cost.

The concerns are echoed by businesses around the country.

"Those fees are just astronomical," Alexa Alfaro, a restaurant and food truck owner, told our Scripps station in Milwaukee.

Alfaro said she had to raise prices in part to cover delivery commissions and keep her staff employed.

"They're anywhere from 20 to 33 percent, which is crazy," Alfaro said, "It's still cheaper than I think hiring in house delivery services in terms of insurance purposes."

Postmates, which was recently purchased by Uber, told TMJ4 in Milwaukee that commissions are "privately negotiated agreements" and that they pay for the services the company provides.

A spokesperson for Grubhub emphasized restaurant owners "select the services they want and only pay us when we help generate sales."

Delivery comes with a 10 percent fee, which pays the driver and covers logistics such as coordinating drivers, performing background checks and updating delivery technology.

"This is optional; a restaurant can choose to perform its own delivery. But the costs associated with delivery are not optional," the spokesperson said.

Grubhub also has a processing fee of 3.05% and $0.30 on each order, plus an average marketing fee of 10-15 percent.

When the pandemic began, Grubhub offered a temporary marketing fee deferral to restaurants.

Meanwhile, DoorDash declined to share its fee breakdown, but the company said it offers both free and commission-based services to restaurants.

In April and May, DoorDash cut commissions for its partner restaurants by 50 percent. New partners, meanwhile, were able to sign up and pay no commission fees for 30 days.

In addition, DoorDash launched a new web service that allows restaurants to create digital storefronts that are commission-free.

Opting Out

Even though Waldo Thai didn't sign agreements with any of the apps, that doesn't mean the restaurant has been kept off all of the platforms.

"Recently it has gotten really bad," Chang said.

Chang said orders continue to come in from Postmates, where Waldo Thai is still listed.

"We just don't like the concept of them taking our menu without our permission and then posting it onto their own website," he said, "And then not only that, they are posting the incorrect menu because we're a seasonal restaurant."

Chang pointed out rejecting orders comes with its own headaches.

"Whenever we freeze an order from Postmates, it literally says the restaurant is too busy to accept orders, and that's not the case. We just want to ensure the quality of the food we're handing over to you," he said.

Postmates didn't respond to several emails for comment from the 41 Action News I-Team, but the company told Fox Business earlier this year that restaurants just have to reach out if they want to be removed from the platform.

DoorDash has a similar policy.

At the end of the day, your favorite restaurants will likely keep more money if orders go through them.

"When you order directly from the restaurant, the restaurant gets 100 percent of the money," Chang said.

Chang said he understands delivery has become a necessity for some.

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