Covid-19 restrictions have devastated restaurant in-house dining, which has catapulted delivery into a critical revenue channel for local restaurants and food shops.
Delivery requires significant logistics, including technology, online ordering and the actual delivery itself, operations which often represents a new business. Major tech companies have arisen to solve this including DoorDash, which just went public this week, Uber Eats, GrubHub and more.
Some local restaurants have even taken delivery into their own hands: Arcana just launched in-house delivery, as did Dave Query’s Big Red F restaurant group, as well as banh mi sandwhich shop DAIKON.
While they provide a service, these companies larger tech companies take a huge percentage of restaurant revenues, from to 20 to 35 percent of a ticket and even higher in some cases, and they’re making — and losing — millions of dollars as a middleman. DoorDash just went public and revealed a net loss of $667 million on $885 million in revenue in 2019.
These services are expensive for restaurants. For example, GrubHub takes over 34 percent of a restaurant’s total receipt when a customer orders food through its app; that includes a 20 percent marketing fee, a 10 percent delivery fee and a processing fee. This doesn’t include any driver tips.
A new third-party food delivery player has emerged in the Boulder area, Nosh Delivery, that launched in Iowa City, Iowa, and has quickly expanded in Northern Colorado, first to Fort Collins then Loveland and Greeley and now is taking Boulder by storm (over 100 restaurants have signed up so far).
The city of Boulder, in fact, chose the delivery service in its S.O.S. program to support restaurants. Under the program, the city is covering the 15 percent delivery and service charge for restaurants and the delivery charge consumers pay through December 30; in addition the city will cover any commission fees above 15 percent that the app charges restaurants in 2021 while in-restaurant dining restrictions are in place.
The startup functions much the same was as the its larger competitors, but has some key differences: namely that it looks to bring on local restaurants as part owners when it moves into a market, that it caps its commission fees at 15 percent and brings local accountability to the third-party food delivery world, according to Shawn Camden, owner of Sancho’s Mexican Restaurant in Gunbarrel and one of a handful of local restaurateurs to buy shares of the company.
Shawn has become a point person for Nosh Boulder’s operations, helping coordinate marketing and spreading the word among his restaurant colleagues. Nosh founders, he tells BLDRfly, retain 30 percent ownership of the company; the other 70 percent has been made available to restaurant partners to buy into.
As Shawn told BLDRfly, Nosh Boulder has a local dispatcher who helps solve any issues that arise in a delivery. The service also has a quality control process in which it hires and works with more responsible delivery drivers. Many local restaurateurs have experienced frustration with subpar third-party driver experiences; when there’s a mixup, third-party apps can complicate resolution.
With its more local approach, Nosh works to solve this.