Toast, a restaurant point-of-sale (POS) software provider, has unveiled a new service to provide restaurants with a delivery network of drivers free of high commissions, according to an announcement on Tuesday, (April 28).
The Boston-based company said Toast Delivery Services will provide eatery owners with a food delivery option for a flat fee of $8 per order within a five-mile radius.
In an op-ed piece in The Boston Globe on Tuesday, John Schall, owner of El Jefe’s Taqueria in Cambridge, Massachusetts, wrote that four third-party delivery companies — DoorDash, GrubHub, Uber Eats, and Postmates — control 99 percent of the restaurant delivery market.
It's a classic oligopoly, he wrote, where restaurants that purchase their delivery services have no choice on price because they all charge between 25 and 30 percent of the total price of the food being delivered to customers.
As a result, he wrote, these companies create a dire financial threat to the survival of the very restaurants they serve.
Compared to third-party delivery marketplaces, Toast said in its announcement, a restaurant that processes $5,000 in deliveries will save more than $600 per month in commission fees using Toast Delivery Services.
"I’m worried about the future of our industry,” said Jarett Berke, owner and operator of Lou’s Restaurant & Bakery in Hanover, New Hampshire, in a statement. “If we continue to allow delivery apps to charge exorbitant fees and claim all of our profit as their own, we will never recover from the changes brought on by the [coronavirus] pandemic.”
Berke said most restaurant owners have profits in the single digits while delivery companies charge up to 30 percent on every order.
The on-demand solution does not require a Toast POS or Toast hardware purchase, the company said. The firm said in the release that the solution is designed to help the restaurant community adapt during the pandemic and beyond.
Unlike traditional third-party delivery platforms, the Toast approach allows restaurants to pass some or all of the delivery fees on to guests, the company said.
Restaurateurs who use Toast Delivery Services, get all guest data and can build one-to-one relationships with their customers while offering safe, contactless, delivery directly from their restaurants.
“We should have access to our customer data,” said Berke. “Toast is committed to helping us make this happen."
Toast data shows guests spend 25 percent more when they order directly from a restaurant’s own website.
“At Toast, we're hyper-focused on helping the restaurant community not only navigate the COVID-19 health crisis, but also take control of the guest experience so restaurants can thrive when the industry begins to recover,” said Aman Narang, president and co-founder of Toast, in a statement.
Earlier this month, Toast said it would cut about half of its staff, 1,300 employees, as COVID-19 shutters businesses nationwide.