In an unassuming building along theSalt Point Turnpike inPoughkeepsie, the staff of Uncle Joe's Chicken Shack are busy at work.
True to its name, the restaurant is all about the chicken, serving up tenders, chicken sandwiches and chicken tacos along with a plethora of dipping sauces.
If you've never seen the restaurant, well, that's the point. Uncle Joe's Chicken Shack is a DoorDash-exclusive, delivery-only restaurant operating out of a ghost kitchen run by the folks operating Joe Cristiano's Pizza.
"This has allowed us to easily try out a concept without much of the upfront cost of opening a restaurant," said Jim Ryan, co-owner ofUncle Joe's Chicken Shack andJoe Cristiano's Pizza. "We don't have a credit card scanner or a cash register. We have a telephone, but it's only really for when DoorDash drivers can't find the building."
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At the same time, Ryan is wary of the increasingly prevalentdelivery apps.
"If you use them right, they can be beneficial to your business," Ryansaid. "But, if you let these apps run wild with your brand, it may do more harm than good."
Since the onset of the COVID-19 pandemic, takeout and delivery have become crucial for Mid Hudson Valley restaurants contending with statewide dining restrictions. Third-party delivery apps, such as DoorDash, Uber Eats and Grubhub, played no small part in the reliance of residents ondelivery dining.
For restaurants that did not traditionally offer delivery, these apps allowed access to drivers and an ordering system and bypassed the need for struggling restaurantsto hire additional staff or invest in their own delivery systems.
Even for those that already offered delivery, the apps could expand their service area. At the very least, presence on an app serves as free advertising.
"(Delivery drivers)and people that have never heard of our establishment are now aware, so from a marketing aspect it’s getting us business," said Bobby Jordan, co-owner of Sweetbakes Café in Wappingers Falls."It works for a small staff that doesn’t have to be out delivering."
And the pandemic-fueled reliance on delivery has led to the rise of these delivery-only ghost kitchens, as well as "virtual brands," restaurants listed on delivery apps which are owned and operated by existing restaurant chains.
But many restaurant owners consider these delivery apps a double-edged sword, at a time when surviving in the industry is tenuous.
For all their benefits, the associated fees, some as high as 30% of the cost of an order, eat into restaurant profits.
In January, Dutchess County Executive Marc Molinaro signed an emergency order capping these fees to 15% for the duration of the pandemic. In turn, some of these apps have implemented additional fees for customers to make up for capped merchant fees.
"We support a free market, innovation, and the entrepreneurial spirit that created the third-party apps. We also support the individuals working for them providing an essential service in our community," Molinaro said."However, we do not support extortion or price gouging on the front or back end.Charging a restaurant at any time a 30% fee or commission for a menu item is price gouging pure and simple— charging it during a pandemic is unconscionable."
The order also disallows these apps from adding restaurants to their offerings or changing menu prices without the owners' permission.
But, the order will not continue forever. And the fees are only one way in which owners fear the apps could be hurting theirconnection with customers.
Ryan said he's heard stories of delivery apps buying website domain names and manipulating Google search results to ensure search traffic is seeing the app before the actual restaurant.
"At that point, you're almost competing against yourself," he said.
Restaurants fight for survival
Employment in the leisure and hospitality industry for the Dutchess-Putnam region dropped more than 25% between Nov. 2019 and Nov. 2020, according to Molinaro.
Sales for restaurants were down by nearly 30%, the National Restaurant Association reported in January.
A February survey from the National Restaurant Association found that, while more people are orderingoff-premises meals, the cost does not make up for sales lost on indoor dining.
Prior to pandemic lockdowns, less than 60% of adults said they ordered takeout or delivery for dinner in the past week, and 37% said they ordered for lunch in the week prior. In the nine months prior to February, an average of 65% of adults said they ordered delivery or takeout for dinner within the past week, and an average of 46% of adults reported similarly for lunch.
Despite this increase, delivery and takeout have not made up for the loss of sales from indoor dining.
Per the National Restaurant Association, 77% of fine dining establishments said off-premises sales made up for less than 20% of lost sales. Among family dining and casual dining establishments, more than 50% said off-premises sales accounted for less than 20% of sales lost on indoor dining.
But, the apps have helped many.
Ariel Cordova, owner of Pancho Villa Mexican Restaurant in the City of Poughkeepsie, uses DoorDash, Uber Eats and Grubhub. Amid the pandemic, he said the apps have been an excellent source of revenue.
"It's a big win, and now customers have more options and can get their favorite food delivered to them," he said. "Before, you basically had pizza and Chinese food. Now, it's a whole different ballgame."
Pros, cons with delivery apps
Phil Cordero, owner ofCafé Con Leche in Wappingers Falls, said the apps are convenient, promoterestaurants and increase revenue. But fees coupled with certain service issues on the app's end can burn restaurants.
"During busy times, these companies will group orders for one driver that may have deliveries 20 minutes apart, and not only are they that far apart, but they also have to wait for the orders to be complete before they leave," Cordero said,"which could be 20 or 30 minutes between orders, thus delivering our food an hour to an hour-and-a-half after it was prepared."
Cordova said he's seen a surge of orders through the apps, with customers on different platforms ordering at different times.
"It's interesting, because on Grubhub, I'll have a very busy lunch rush from 11 a.m. to 6 p.m., but then I'll see a surge of DoorDash orders from 6 p.m. until 2 a.m."
Ryan says these apps can be a useful tool for restaurants, but he emphasized the importance of notrelying on them completely.
"If these third-party apps are your only delivery option and your only online presence, that's a bad thing," he said. "With the Chicken Shack, we knew what we were getting into, so we prepared for the costs associated with the app."
Some added fee after county action
Dutchess County fielded complaints ranging from outrageous fees to unauthorized price changes.
"Several of the local independent restaurant owners complained not only about the gouging technique by these national companies but additionally that some of the apps use the restaurant'smenu and change the restaurant's pricing on the app's sites without permission," Molinaro said.
While restaurants have received a break from these fees, the cost has been passed on to the customers. DoorDash and Caviar both list regulatory response fees upon checkout, while Seemless, Grubhub and Uber Eats do not show a similar fee.
"Across the country, many apps have implemented a 'regulatory response fee'of $1.50 per order, which is arguably more fair and reasonable," Molinaro said."At the end of the day, though,it is the people and the small businesses in our communities that will decide what's fair."
But Jordan said these fees take a toll, often resulting in customers leaving a smaller tip than they would otherwise.
"Customers who order are doing it straight out of convenience, and the fees get so high that they can’t even tip the driver," he said."If I’m ordering pizza or picking up takeout from small family-owned (restaurant),it’s good to order direct."
Post-pandemic dining
With New York scheduled to increase indoor dining to 75% capacity later this month, some restaurants question if the importance ofdelivery apps will continue.
Cordova said he is unsure whether he would stick with the apps post-pandemic if the fees return to their normal rates.
"I think the reliance on these apps will change after the pandemic, but not customer appetites," he said. "If the fees are going to return, I might just invest that money into my own app for deliveries."
Ryan feels there is a place for these apps in any business, so long as they are not relied upon.
"We don't advertise our DoorDash," he said. "It's there, so the people who are already using the app will see us. But we are not pushing people toward the app."
Geoffrey Wilson: gwilson@poughkeepsiejournal.com; 845-437-4882; Twitter: @GeoffWilson_
