Digital food delivery service DoorDash has rolled out physical and online advertisements seeking delivery drivers in Yellowknife, but some business owners are concerned about the service’s entry into the market.
The American company, headquartered in San Francisco and founded in 2013 has expanded widely across North America and serves thousands of restaurants.
DoorDash has for several weeks been advertising online for delivery drivers in Yellowknife. One business said DoorDash has been pitching the service to them with insistent, weekly phone calls for a month.
A physical sign advertising McDonalds food available for delivery through the service was put up at the drive-thru at the restaurant on Old Airport Road Thursday.
A DoorDash kit including a bag, branded face mask and hand sanitizer was posted on Facebook Marketplace on the same day. The poster told NNSL Media they’re promoting the company on behalf of a family member who works for DoorDash.
Brad Anstey, who owns the Fatburger and Subway at Stanton Plaza, and is part owner of the local A&W hopes the service doesn’t enter the Yellowknife market.
“DoorDash is trying to get enough business from the local restaurant business people here so they can hire their drivers and have business for them,” he said. “The problem is that they take 30 per cent of your sales – they might get them down to 25 per cent. And a lot of business owners think it’s going to be incremental sales. At 25 to 30 per cent, my bottom line is not even that much.”
Another five per cent of sales are taken for the usage of DoorDash’s app, he added.
Anstey worked with DoorDash in the past at one of the Fatburger restaurants he owns in Edmonton, but cancelled the service after four weeks.
“It’s highway robbery,” he said.
“It’s the fees. I would lose, say $200,000 from in-store sales. People then don’t come to my restaurant because they want to order. I’ve got to sell (about) $500,000 just to be able to break even to have the same amount of profitability. That means my staff are working harder, that means I got to put more staff on which means my wage costs go up. I’ve got more revenue I’ve got to generate. I’m selling from the deliveries, I’m working harder, and I’m making less money.”
Since the Covid pandemic hit the NWT, Anstey had tried to stay ahead of the game and worked with the Fatburger head office to build an online ordering platform to use with the Mobi2Go food delivery app for his restaurants.
“They (take) only five per cent, and I hire my own local drivers. I want to keep the money in my community so I can I have money to advertise and help out non-profit organizations, because I do quite a bit of that.
“All the Subways down south are on DoorDash. I almost would be forced to go with DoorDash up here if they come into this town with Subway, but I won’t do it. I’ll fight it tooth and nail with my franchiser.”
Mark Henry, co-owner of the Copperhouse restaurant said he feels similarly to Anstey, and regards DoorDash’s business model as “very aggressive.”
“It doesn’t make any sense based on the margins in the industry as a whole, especially in Yellowknife which has more expensive costs associated with running a business,” Henry said.
“If it takes hold, it is very difficult for local businesses to gain any benefit from it. A lot of money is taken out of the local business community, to a California-based, large conglomerate technology company.”
Henry said he has already turned down the company’s overtures to join the service.
In his view, there is no need for DoorDash to enter Yellowknife because some local restaurants are already operating their own digital delivery programs. In addition to Anstey’s Fatburger service, Mary Browns has its own app for delivery and Woodyard customers can order beer for delivery online.
While Henry explained that “nobody has a gun to their head” to sign up for DoorDash, he worries that if the service catches on in Yellowknife and more restaurants subscribe to it, more would have to join to stay competitive.
“If everybody signs up, then it’s an issue, because (then) I’m obliged and if I want any business I need to go to that platform. What they do very effectively is marketing and they have a very slick, user-friendly platform.”
Door Dash driver appears at Monkey Tree unannounced
It seems a restaurant doesn’t necessarily need to sign up to appear in the app.
Monkey Tree pub owner Jenn Vornbrock said she was alerted on Thursday that DoorDash was selling the menu of her Range Lake Road pub on its app.
“A driver showed up at the pub today wanting to place an order,” she said. “I instructed my bartender to tell the driver we were not affiliated with them and that our menu should be removed from their app immediately. As soon as the driver left we got a call from DoorDash in Montreal asking why the order wasn’t placed. I told them to take my menu off their app.”
The experience came after about a month of weekly phone calls from DoorDash representatives pitching the service to Monkey Tree.
“At first they said we would miss out on all this great business, and that this is the way Yellowknife will be going. It was almost threatening. They said it would cost about 30 per cent of our sales. I thought, ‘are you crazy? we can’t afford that.’
“These guys have no idea of the costs of operating in the North. If we let this into Yellowknife it’ll kill off the little guys who are trying to make it fair. The consumer needs to be educated. I think Yellowknife has to be careful with this.
Vornbrock posted on the food-related Facebook group “Bite Me Yellowknife” that she was working to have the pub removed from DoorDash’s app.
“We will not be accepting any orders from this virus of a company,” Vornbrock said. “We support local and are working with RSS Delivery Services to enable a delivery service for you that is affordable to our family business.”
A DoorDash spokeswoman said on Friday that the company sometimes offers to be a courier for restaurants that haven’t yet signed up for service as a test to see if they like it, at no cost to the business.
“DoorDash was founded to help empower local businesses. They’ve found it increased their sales,” she said.
But she said DoorDash understands why some businesses might be turned off by that approach and it would remove those restaurants from the app.
The company is currently offering 0 per cent commission for new restaurants on its platform for 30-60 days, and waived delivery fees for orders over $25 “to help encourage consumers to order from local restaurants impacted by indoor dining closures.”
After the 30-60 days are up, how commissions could change would depend “on our relationship with the restaurant. If they want to continue using their own drivers, the commission fee differs depending on the tools you use. There are three options: they can use our platform and Dasher drivers; they can use their own website and Dasher drivers; and the third option is to list a business on Doordash but use their own driver, and there is no commission fee.”
She couldn’t say what the commission fees would be after the 30-60 days, due to privacy issues.
The spokeswoman added that restaurants subscribing to DoorDash’s service were six times more likely to stay open than others, with nearly two-thirds of merchants saying they were able to increase profits during Covid-19.