I'm not a fan of delivery apps (I prefer calling in my order and picking up), but I thought I'd investigate the oft-repeated refrain that restaurants either make no money or a loss. I think it depends.
From my back of the envelope calculations, it seems that the conditions necessary for a restaurant to break even or make a tiny profit with delivery apps that take a 30% cut exist but are narrow. For the restaurant to cover that fee, it would have to increase its online prices by 1/(1-0.7) - 1 = 43%, which would make it less competitive to a segment of its consumer base.
On the other hand, if the app's fee was 15% (which it is in Chicago, due to a city-wide cap), a restaurant only has to increase its prices 1/(1-0.15) - 1 = 18%, which is more palatable and less noticeable.
It does also create cash flow, and there are various things you can do with cash flow.
If you can increase sales velocity, the increased returns might be able to help profitability (though the counterfactual is hard to prove -- if you didn't have the apps, would velocity have been lower? Hard to measure).
From my back of the envelope calculations, it seems that the conditions necessary for a restaurant to break even or make a tiny profit with delivery apps that take a 30% cut exist but are narrow. For the restaurant to cover that fee, it would have to increase its online prices by 1/(1-0.7) - 1 = 43%, which would make it less competitive to a segment of its consumer base.
On the other hand, if the app's fee was 15% (which it is in Chicago, due to a city-wide cap), a restaurant only has to increase its prices 1/(1-0.15) - 1 = 18%, which is more palatable and less noticeable.
It does also create cash flow, and there are various things you can do with cash flow.
If you can increase sales velocity, the increased returns might be able to help profitability (though the counterfactual is hard to prove -- if you didn't have the apps, would velocity have been lower? Hard to measure).