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To save their neighborhood small businesses, people are rebelling against delivery apps

Apps like DoorDash and GrubHub frequently collect between about 10 percent and 30 percent of an order in fees, prompting some consumers to call and pick up orders themselves

A growing number of San Francisco Bay area residents are supporting local small businesses such as Bernal Bakery. Chefs Daniella Banchero and Ryan Stagg began the pop-up, where you pick up your bread out of a lowered-down wicker basket. (Melina Mara/The Washington Post)
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SAN FRANCISCO — Every morning Turtle Brennan, a research engineer who lives here in the Mission District, buys a coffee from Ritual Roasters, a locally based coffee chain. Since the stay-at-home order, he’s also been getting a pastry so he can support the bakeries it works with. He calls restaurants and picks up his food directly, and he still buys books from Borderlands — the same local bookstore he’s been visiting regularly for more than 20 years.

“It is incredibly difficult not to go to Amazon when you need to buy something kind of esoteric,” said Brennan. “I’ve been making a conscious effort to search out alternatives.”

Brennan’s efforts are being reflected across the Bay Area, as consumers here grapple with a pandemic that is heightening an already complicated relationship with the technology industry. To help local businesses, many of which are on the edge of going under, some people here are going out of their way to call restaurants instead of using fee-charging delivery apps. They’re hiring gig workers directly, finding local businesses selling things they usually get on Amazon and cutting out the tech middlemen whenever possible.

The Bay Area is home to many of the very start-ups they’re trying to circumvent, including Uber, DoorDash and Instacart, which have created new ways to order and deliver food and goods. Billions of dollars of funding have been poured into tech companies of all kinds in the area, fueling one of the most expensive housing markets in the country. It’s also prompted a backlash, as the city that was once known for hippies and Burning Man attendees transformed into the heart of the capitalism-driven tech world.

These apps have proved hugely useful to many restaurants suddenly unable to host diners and switching to delivery models, as well as laid-off workers desperate for work. For companies, the apps make it easier to reach a wide audience and conduct online sales despite the pandemic, and put a staff of delivery workers at their fingertips instantly. But the convenience comes at a cost.

Diners and restaurants owners from across the country have become more aware of the issue during the crisis. Giuseppe Badalamenti, owner of Chicago Pizza Boss and a restaurant consultant, posted a receipt from another restaurant he was working with that showed seemingly exorbitant fees from Chicago-based Grubhub. What started as $1,042.63 in food sales was reduced to $376.54 after Grubhub fees for delivery, commission, processing and promotions. Grubhub said restaurants choose what services they add on and that the invoice was an extreme outlier.

“When you take away the diners all you’re left with is this predatory, venture capital, third-party app as all of your business,” said Badalamenti. "Thirty percent on the very extreme end barely pays for your food. You still have to keep the lights on, still have to pay for the labor.”

Controversy over the gig economy’s business models, which provide workers few protections and typically collect between 15 percent and 30 percent in fees as the middleman, have prompted soul searching by consumers and actions by local governments around the country.

San Francisco, Seattle and the District have all passed a 15 percent cap on app delivery fees to help struggling restaurants, and other cities such as Boston are weighing similar measures. Chicago passed new rules requiring delivery apps to show customers an itemized breakdown of fees so they could see how much restaurants were getting. And customers are increasingly circumventing apps when possible.

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Jeremy, who has worked making deliveries for delivery app Postmates since before the coronavirus, says he typically receives as little as $5 per order before tips. But as demand for deliveries boomed over the past couple months, Jeremy, who declined to give his last name because he’s still working part time for Postmates, has compiled a roster of about 20 people who pay him anywhere from $10 to $50 per grocery delivery. The 32-year-old is even advertising his services on Craigslist.

Because they liked his customer service, he says, they asked, “‘Hey, is there any way I can choose you personally?’”

To help address the concerns, many delivery companies are temporarily changing their fees or offering extra help to companies and workers. DoorDash and its subsidiary Caviar are cutting restaurant commission fees 50 percent through the end of May, and Grubhub announced it would defer up to $100 million in commissions for restaurants, but not waive or decrease them. Uber Eats is waiving commissions on pickup orders and delivery fees for consumers buying from independently owned restaurants.

The companies, which have seen an increase in their delivery business over the past two months, have also defended their fees. They say they’re necessary to run the services and pay drivers, and that they are helping restaurants while business shifts to delivery and takeout. They say they are helping small businesses stay afloat during the pandemic.

“Reducing the commissions that fund our marketplace—particularly during these unprecedented times—would force us to radically alter the way we do business in a way that could ultimately hurt those that we’re trying to help the most: customers, small businesses and delivery people,” Uber Eats spokesperson Meghan Casserly said in a statement.

Uber is currently exploring purchasing GrubHub, according to media reports.

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In the Bay Area, where the first regional stay-at-home orders were issued March 17, people on neighborhood Facebook groups and Nextdoor are sharing tips for which local restaurants need more business and where to buy goods locally instead of from bigger retailers. To support area farms, they’re going in on bulk farm buys of blueberries and strawberries together, or buying local CSA boxes instead of getting produce at chain grocery stores. And for the businesses that can’t carry on right now, they’re starting fundraisers for employees who can’t work.

It’s all a return to just a decade ago, when delivery apps weren’t yet ubiquitous and food orders typically required picking up a phone.

“We have been ordering more food than we need,” said San Francisco resident Amanda Rubin, a biotech lawyer. “We’re trying to do more, shifting purchases to in-person — maybe not entirely, but to the extent possible.”

When the county stay-at-home order went into place, Rubin found herself with extra time on her hands and a desire to be helpful. She started a spreadsheet of businesses in her San Francisco neighborhood to show what was open or offering online deliveries, included phone numbers where possible, and then shared the document with the community so anyone could update it. It has grown to 96 businesses and has columns for buying gift cards and contributing donations, and she regularly sees multiple people using the document — although it’s impossible to tell how many in total have accessed it.

It’s not just food. On one Bay Area neighborhood Facebook group, a woman posted the name and contact information for an experienced taxi driver, for anyone who wanted to bypass Uber or Lyft. Shoppers are using social media in asking for leads on unique local clothing as an alternative to their usual fast-fashion purchases, or the best place to buy everything from flowers to puzzles. With all that extra time on everyone’s hands, books from local sellers are in high demand.

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Alan Beatts, founder of the Borderlands bookstore, says he is taking orders online, over the phone and through email. Some customers are checking out the store’s selection on the company’s website, which uses a service called Biblio, and then calling the store directly to make sure it doesn’t pay any fees. The store has been able to keep all its employees on payroll.

“Oh, my god, have we had a lot of business,” said Beatts. Normally 95 percent of his sales take place in the store, but in April, two-thirds of his business was online. “I think San Francisco has always had a greater understanding that we’re a community and we affect each other.”

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For many Bay Area restaurants, the apps are hard to give up. They typically don’t have the same infrastructure or reach on their own. In normal times, when deliveries are only one slice of their income, it’s not as much of an issue. But with dining areas closed, takeout and delivery are many restaurants’ primary income.

“Overall, you do more business, right, because you’re now on this massive platform that reaches far more people than you’re able to reach on your own,” said chef Ryan Stagg, who works at pizza joint Pollara in Berkeley. “The catch is you’re doing a lot more work, but you’re making so much less money for it.”

Stuck at home when their respective restaurants were closed, Stagg and his fiancee, chef Daniella Banchero, decided to start selling bread to their San Francisco neighborhood. They make fresh baked goods and lower them from their San Francisco home in a basket, for a contactless and whimsical delivery. One welder neighbor volunteered to build a proper pulley system. Another is an artist and made a custom sign with their business name, Bernal Bakery. Now local restaurant Foreign Cinema has offered them use of its kitchen space free so they can bake even more. It’s a basic business that still uses technology: They were taking payments through Venmo and just launched a Squarespace website for online orders.

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Others are taking a harder line. San Francisco restaurant owner Vega Freeman-Brady says she’s able to keep much of her staff employed because she doesn’t use delivery services. Unable to serve diners inside her restaurants Vega or Bernal Star during the lockdown, she’s taking orders over the phone and in person. Busboys do deliveries and waitstaff operate the phones. She says she still gets around 15 emails a day from the various delivery companies trying to get her on their apps, but she isn’t tempted.

“You’re paying out 30 percent to these delivery services and your margins are 10 percent, so it doesn’t make sense,” said Freeman-Brady. “We don’t want to raise prices. I’d rather pay my employees more and give them a living wage.”

Patricia De Fonte is another San Francisco resident putting extra effort into supporting local small businesses. She contacts local businesses directly, picks up her own food and skips major online retailers in favor of independently owned shops in her Excelsior neighborhood. She still uses some apps, such as Instacart, for her grocery deliveries, but even then makes sure to select local grocery stores and tip well.

“I’m so interested in not lining corporate pockets right now,” said the estate-planning attorney. “When we come out of this, I want to have a neighborhood to come back to, and I want to go back to running errands in real life.”