How to Protect Restaurants, Workers, and Communities from Predatory Delivery App Corporations
New Economic Liberties’ Report Exposes Delivery Apps & Outlines Federal & Local Solutions
Washington, D.C. – In support of the Protect Our Restaurants campaign, the American Economic Liberties Project today released “Rescuing Restaurants: How to Protect Restaurants, Workers, and Communities from Predatory Delivery App Corporations.” Authored by Senior Fellow Maureen Tkacik, the paper reveals how predatory delivery apps have used abusive, deceptive, and often illegal practices to take control of the restaurant industry and lays out federal and local solutions to aid in creating healthy restaurant markets.
“The four dominant delivery apps – two of which intend to merge with one another – have burned billions of dollars and broken countless laws with impunity while making it harder and harder for small restaurants and workers to get by,” said Maureen Tkacik, Senior Fellow at the American Economic Liberties Project. “But while their tactics and strategies are cribbed from Google and Amazon, the delivery apps are not that powerful yet. Our regulators, antitrust enforcers, and legislators must show the resolve to enforce our laws with all the determination and zeal with which the delivery apps have flouted them.”
DoorDash, Grubhub, Postmates, and UberEats dominate 98 percent of all food delivery sales. But rather than compete to serve customers and restaurants, the apps use Wall Street money to accumulate market power, raise barriers to entry, and merge with each other to set up regional monopolies. In fact, in many cities, just two of the apps dominate, giving them tremendous power over both restaurants and workers.
The apps charge large commissions to restaurants for the service of processing orders, even more for delivering them, and still more for lending promotional support like the $10 discounts. These fees virtually guarantee that all orders placed to independent restaurants over delivery apps are unprofitable for the restaurants. While Grubhub goes to great lengths to extract tolls from its restaurants, DoorDash and Postmates regularly use industrial scale menu plagiarism to simulate the appearance of official partnerships. All increasingly rely on “ghost kitchens,” anonymous commissary kitchens that compete with local restaurants and provide food exclusively for the delivery apps.
At the same time, the apps misclassify their drivers as “independent contractors,” paying them rates far below minimum wage, once mileage and additional payroll taxes are deducted. The apps conceal much relevant information from drivers, chronically tweak their formulas for remunerating couriers, usurp tips to apply them to guaranteed minimums, and levy fees and adjust policies in ways that keep workers constantly struggling to stay afloat. And all, especially DoorDash, deliberately flout laws to protect these workers.
Ensuring that restaurants and communities can connect through new technologies while preventing predatory practices by middlemen will require the deliberate structuring of markets by local, state, and/or federal authorities. “Rescuing Restaurants” includes nine solutions to do this, centered around the principles of fair commerce, transparency and no conflicts of interest.
Read “Rescuing Restaurants: How to Protect Restaurants, Workers, and Communities from Predatory Delivery App Corporations” here.
Find more information on the Protect Our Restaurants campaign here.
Learn more about Economic Liberties here.
Economic Liberties works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. AELP believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.