The Independent Restaurant Coalition (IRC) is advocating for immediate regulatory reforms in the third-party delivery app market. While these platforms—DoorDash, Uber Eats, and Grubhub—provide convenience for consumers and have experienced rapid growth, they often impose unsustainable financial burdens on independent restaurants. Without action from Congress, the current market dynamics will continue to disproportionately harm small and mid-sized restaurants, threatening their ability to thrive.
As of 2023, the U.S. food delivery market reached $99.1 billion, a testament to its expansion. This sector is overwhelmingly dominated by a few key players:
- DoorDash: 67% market share
- Uber Eats: 24% market share
- Grubhub: 7% market share
In 2022, these companies reported substantial revenues, with DoorDash earning $5.5 billion, Uber Eats generating $10.9 billion globally, and Grubhub reporting $2.5 billion. Despite their profitability, these platforms charge independent restaurants commission rates as high as 30% per order, along with additional fees for marketing and premium placements. This arrangement forces many restaurants into precarious financial positions, reducing their already thin profit margins.
Why Restaurants Are Disproportionately Affected
The challenges facing independent restaurants extend beyond high commission fees. These third-party delivery platforms also restrict access to valuable customer data, making it difficult for restaurants to build direct relationships with their patrons. Additionally, independent restaurants often lack the resources to negotiate better terms or develop in-house delivery alternatives. As a result, many establishments become overly dependent on these platforms for customer acquisition and retention.
For small and mid-sized restaurants, the costs and constraints imposed by third-party apps are unsustainable. High commission fees, coupled with marketing expenses, drastically reduce profitability. These platforms also place limitations on pricing strategies, further eroding financial flexibility. For many independent operators, survival is becoming increasingly difficult in this unequal market.
The Need for Congressional Action
The IRC is calling on Congress to introduce regulatory measures to protect independent restaurants from the predatory practices of third-party delivery apps. Without intervention, many beloved local establishments will continue to struggle under the weight of unfair commissions and restrictive business models. The time for action is now. To ensure a more balanced and fair relationship between third-party delivery platforms and restaurants, the IRC is advocating for the following reforms:
- Written Agreements: Delivery apps should not be allowed to advertise or sell a restaurant's products without a formal written agreement. This protects restaurants from being listed without their consent or under unfavorable terms.
- No Price Restrictions: Delivery platforms should not impose restrictions on the prices set by restaurants. This ensures that restaurants maintain control over their pricing strategies and can adjust to changing market conditions.
- Commission Fee Cap: A cap should be placed on commission fees, with no platform allowed to charge more than 15% of an order for delivery services. This would significantly reduce the financial burden on independent restaurants.
- Transparent Fee Disclosure: All fees and charges associated with a customer’s order must be clearly disclosed upfront. Additionally, a receipt outlining these costs should be provided after the transaction to increase transparency for both restaurants and customers.
- Customer Interaction and Listing Removal: Delivery platforms must establish clear methods for restaurants to communicate with customers regarding orders. Additionally, platforms should outline the circumstances under which a restaurant can request the removal of their listing from the app.
The third-party delivery app market, dominated by a few major players, presents significant challenges to independent restaurants. High commission fees, lack of customer data access, and predatory practices have made it increasingly difficult for small and mid-sized establishments to thrive. The IRC is urging Congress to take action by implementing the proposed regulatory reforms to level the playing field and ensure the long-term sustainability of independent restaurants and bars.
By acting now, Congress can protect a vital part of the U.S. economy—independent restaurants—while supporting local communities and ensuring a fairer and more equitable market.