With global food delivery sales expected to reach $200 billion by 2025, restaurants are partnering with third-party platforms to drive revenue. But this strategy comes with serious risk — companies like DoorDash, Uber Eats and Grubhub take double-digit commissions off of every order, and some have been accused of skimping drivers of their tips and adding hidden fees to restaurant charges.
Despite the drawbacks, however, many restaurants aren't in a position to build out their own delivery fleet in-house. And third-party companies can give brands access to new markets and consumer bases, assets that can help independent restaurants grow both brand awareness and their off-premise footprint.
But which third-party delivery platform is best for business? Restaurant Dive took a look at the top five U.S. contenders and broke down how they compared based on commission rates, driver employment status, POS integration and more.
Check out our findings below:
DoorDash
Fees/Commission rate: Around 20%. DoorDash also charges commission fees for marketing on their app. Restaurants can pay to be at the top of the search list for a limited time.
Driver employment status: Independent contractors
POS integration available?: With select POS systems, including Square. It also partnered with Chowly in September so that restaurants could accept delivery orders directly.
History of bad behavior/lawsuits/criticisms: Class-action lawsuit over tip skimming. DoorDash said in August that it would revise its tipping system.
Recent acquisitions: Caviar (Square's platform) for $410 million and ScottyLabs (August 2019).
Uber Eats
Fees/Commission rate: Up to 30% for small restaurants while large chains typically pay much lower.
Driver employment status: Independent contractors
POS integration available?: Yes, it can build a solution to connect with a POS system's APIs. If that doesn't work, it will provide access to local software. It currently partners with olo, Urban Piper, access, lightspeed, xenial, Zonal, zelty, andromeda, APITIC, Redcat and Foodtech.
History of bad behavior/lawsuits/criticisms: Class action lawsuit in 2017 accused the company of incorrectly classifying drivers as freelancers and denying benefits.
Recent acquisitions: None in the U.S.
Grubhub
Fees/Commission rate: Total commission can range broadly depending on prepaid order commission, delivery rate, phone order rate order processing fee and a pay me now fee. A sample breakdown revealed a restaurant would pay a delivery commission of 10% for orders placed on a restaurant site whereas Grubhub would charge an additional 20% for orders placed on Grubhub's marketplace.
Driver employment status: Independent contractors
POS integration available?: Yes, and it works with POS providers NCR, Upserve, Oracle, rpower and Toast.
History of bad behavior/lawsuits/criticisms: Several restaurants accused the company of cybersquatting and sharing fees related to phone usage even when an order wasn't made, which the company tried to amend with a new policy in August. Several restaurants also have joined in a lawsuit alleging the company incorrectly charges for non-order phone calls.
Recent acquisitions: LevelUp for $390 million and Tapingo for $150 million (September 2018)
Postmates
Fees/Commission rate: 15% to 30%
Driver employment status: Independent contractors
POS integration available?: With Square
History of bad behavior/lawsuits/criticisms: Drivers protested in June demanding higher pay.
Recent acquisitions: None, but there have been rumors that it was in talks with DoorDash or Uber for a merger.
Waitr
Fees/Commission rate: In July, it changed its fee structure to a sliding scale depending on food sales. Restaurants exceeding $20,000 in food sales received a 15% rate while restaurants below $1,000 monthly food sales had a 25% rate.
Driver employment status: Employed
POS integration available?: Partnered with Olo in August to streamline POS systems
History of bad behavior/lawsuits/criticisms: Louisiana restaurants boycotted the service a few months ago when it changed its fee structure depending on volume of orders. Separately, a handful of restaurants have sued the company saying it broke its contract with restaurants when it increased fees. Some drivers have accused the company of paying below minimum wage.
Recent acquisitions: BiteSquad (December 2018) for $321 million.
Disclaimer: Fees are based on estimates cited by media sources and third-party delivery providers and can range depending on each restaurant partner and the types of services provided.
Emma Liem Beckett contributed to this article.