--:-- [Theme music fades out]
--:-- Host: Support for Today Explained comes from Adio. Adio is an AI-native customer relationship management platform that Adio says is built for the next era of companies.
--:-- [Sound effects: A brief pause]
--:-- Host: Adio says it's extremely powerful, adapts to your unique data structures and scales with any business model. According to Adio, Adio takes less than a minute to set up. And within seconds, you will have your email and calendars synced. You'll see all your relationships in a fully fledged platform, they say, all enriched with that actionable data. And they say you can build AI-powered automations and use its research agent to tackle some of your most complex processes to seize so that you can focus on what matters, building your company.
--:-- [Sound effects: A brief pause]
--:-- Host: You can join industry leaders such as Flatfile, Replicate, Modal, and so much more. You can go to adio.com slash todayexplained to get 15% off your first year.
--:-- [Sound effects: A brief pause]
--:-- Host: This message is brought to you by Apple Card. Each Apple product, like the iPhone, is thoughtfully designed by skilled designers. The titanium Apple Card is no different. It's laser etched, has no numbers, and it earns you daily cash on everything you buy, including 3% back on everything at Apple.
--:-- [Sound effects: A brief pause]
--:-- Host: Apply for Apple Card on your iPhone in minutes. Subject to credit approval, Apple Card is issued by Goldman Sachs Bank USA, Salt Lake City branch. Terms and more at applecard.com.
--:-- [Sound effects: A brief pause]
--:-- Host: Today Explained, Rahm's firm food delivery apps. You know who. DoorDash, Seamless, Uber Eats, Caviar and Company, they have quickly become an essential part of a lot of our lives. But how do all the restaurants feel about them? And what is the cost of all that convenience?
--:-- [Sound effects: A brief pause]
--:-- Host: These questions and many more are answered in the latest season of the Land of the Giants podcast from the Vox Media Podcast Network. The new season is called Delivery Wars. And today we're bringing you episode one of that new season.
--:-- [Sound effects: A brief pause]
--:-- Host: and subscribe so you can hear the rest.
--:-- [Sound effects: A brief pause]
--:-- Host: Once more for The Road, the show is called Land of the Giants, and this season is called Delivery Wars, but all you need to find it is Land of the Giants. Take it away.
--:-- [Sound effects: A brief pause]
--:-- Stanley: The lighting is bad, and the video quality isn't much better.
--:-- [Sound effects: A brief pause]
--:-- Stanley: Hey, I'm Stanley. I'm a Stanford CS major. I did find an engineer at Facebook. It's 2013, and here's the visual. Four earnest guys are crammed onto a couch, practically sitting in each other's laps.
--:-- [Sound effects: A brief pause]
--:-- Andy: I'm Andy. I'm also a Stanford CS major, and I did platform engineering at Facebook.
--:-- [Sound effects: A brief pause]
--:-- Tony: I'm Tony. I was a product editor at Square.
--:-- [Sound effects: A brief pause]
--:-- Tony: These guys are trying to get into Y Combinator. That's the Harvard of Silicon Valley startup accelerators. It's where the most ambitious entrepreneurs go for early funding and coaching in return for a cut of their startups.
--:-- [Sound effects: A brief pause]
--:-- Tony: Yeah, so it turns out restaurants in Palo Alto don't deliver, even though they really want to. This is Tony Hsu. He's smiling sort of nervously, and it kind of seems like he's reading rehearsed lines off of cue cards.
--:-- [Sound effects: A brief pause]
--:-- Tony: But their consumers are craving for it, but the places that the consumers love just can't deliver.
--:-- [Sound effects: A brief pause]
--:-- Tony: Tony is the guy they have lined up to fire off the fastball. And we also found out about these delivery drivers who had a ton of spare time, and they all want to earn extra cash during that downtime.
--:-- [Sound effects: A brief pause]
--:-- Tony: That's the pitch. Why not connect all those workers who apparently had a lot of free time with the restaurants in Palo Alto that wanted to offer delivery? And that's what we're building at DoorDash.
--:-- [Sound effects: A brief pause]
--:-- Host: The video worked. Y Combinator accepted Tony Hsu and the guys into its exclusive program. And in a matter of just a few years, that company, pitched from a couch near Stanford, became a major player in the business of restaurant delivery.
--:-- [Sound effects: A brief pause]
--:-- Host: Now, the biggest meal delivery services in the United States are DoorDash, Uber Eats, and Grubhub. Taken together, the companies that own those platforms are valued at more than $130 billion.
--:-- [Sound effects: A brief pause]
--:-- Host: That's bigger than Chipotle, Pizza Hut, Taco Bell, KFC, and the Olive Garden combined.
--:-- [Sound effects: A brief pause]
--:-- Host: Today, the Palo Alto that Tony Hsu described in his Y Combinator pitch, The city filled with restaurants that don't deliver? I mean, can you even imagine that city now?
--:-- [Sound effects: A brief pause]
--:-- Host: Delivery apps have become so ubiquitous that they're just another routine part of our lives.
--:-- [Sound effects: A brief pause]
--:-- Host: All right, I got to mask up now and go meet the delivery guy.
--:-- [Sound effects: A brief pause]
--:-- Host: Hello. Oh, it's rainy, huh?
--:-- [Sound effects: A brief pause]
--:-- Host: I live in Harlem with my wife, Salima. One night, we ordered some delivery from a restaurant called The Hand Pulled Noodle.
--:-- [Sound effects: A brief pause]
--:-- Host: I had never been there in person. It came up on the apps.
--:-- [Sound effects: A brief pause]
--:-- Host: Did you get two things in the end? You did, didn't you? There was a deal. You're a sucker for a deal. You're from the Midwest. Don't blame yourself.
--:-- [Sound effects: A brief pause]
--:-- Host: As we unpacked my deal, Salima and I noticed a flyer tucked into a menu that came with our order.
--:-- [Sound effects: A brief pause]
--:-- Host: It was headlined, PLEASE READ in all caps. And underneath that was an appeal.
--:-- [Sound effects: A brief pause]
--:-- Host: The note said, please order directly from your favorite neighborhood restaurant whenever possible.
--:-- [Sound effects: A brief pause]
--:-- Host: Because Grubhub and Seamless take a cut of each order. Quote, simply for being the middleman, unquote.
--:-- [Sound effects: A brief pause]
--:-- Host: By the way, I should mention Grubhub owns Seamless.
--:-- [Sound effects: A brief pause]
--:-- Host: I mean, it's extremely memorable. Like, how often do you see like that in your takeout?
--:-- [Sound effects: A brief pause]
--:-- Host: You may actually see more notes like this.
--:-- [Sound effects: A brief pause]
--:-- Host: That's because restaurant owners and drivers say that on-demand delivery, as it's designed now, may not be sustainable.
--:-- [Sound effects: A brief pause]
--:-- Host: They say they're hurting, even though these are the very people the app said they wanted to help in the first place.
--:-- [Sound effects: A brief pause]
--:-- Amadal Yakhbar: Welcome to Land of the Giants. I'm Amadal Yakhbar. I'm a food writer and audio journalist, and I'll be hosting our first ever miniseries, Delivery Wars.
--:-- [Sound effects: A brief pause]
--:-- Amadal Yakhbar: This is a unique season for Land of the Giants because we're not focusing on one big company. We're examining a whole industry, restaurant delivery.
--:-- [Sound effects: A brief pause]
--:-- Amadal Yakhbar: And since that industry intersects with tech and the restaurant business, Delivery Wars is a collaboration with Recode and Eater, Fox Media's food publication.
--:-- [Sound effects: A brief pause]
--:-- Amadal Yakhbar: We're covering delivery apps this season because these companies are giants in the making.
--:-- [Sound effects: A brief pause]
--:-- Amadal Yakhbar: And they're taking the same path that the biggest tech companies in the world took before them. Companies like Amazon, Google, and Netflix.
--:-- [Sound effects: A brief pause]
--:-- Amadal Yakhbar: A path of disruption in the pursuit of convenience.
--:-- [Sound effects: A brief pause]
--:-- Amadal Yakhbar: All the ways third-party delivery apps are upending the restaurant industry, defining the terms of the gig economy, and transforming our culture, that's still unfolding.
--:-- [Sound effects: A brief pause]
--:-- Amadal Yakhbar: Which means this is a perfect moment to look more closely at the rise of these apps, the key players, who ends up in the lost column, and who comes out with a win.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: Back in 2010, in a slightly less online age, Gray Chapman worked the night shift at a doggy hotel in Atlanta.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: I was there by myself. I would be the only person. And it was just me and a bunch of dogs for 12 hours.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: Chapman has come a long way since those dog days. She's a freelance writer and journalist now.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: She's written for Eater as well. But back then, Chapman had one recurring problem.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: After feeding all those pups, she needed to figure out what to feed herself.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: And the nearest thing was a drugstore.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: And I remember stopping in there, like in a rush, just desperately standing in front of their frozen food section.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: So I'd usually end up with either like Tortino's pizza rolls or the little like Jose Olay like beef taquitos.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: But then something rescued Chapman from eating frozen meals all the time.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: Early 2010 or so, I found out about a company that had launched here in Atlanta called Zifty.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: And it was the first time I'd ever heard of anything like this.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: Zifty partnered with local restaurants in Atlanta to coordinate delivery online.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: That alone was a big deal back then.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: And the app connected all sorts of restaurants, not just pizza and Chinese.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: It was a whole new world of luxurious abundance.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: At that moment in time, the like fancy burger places were starting to happen.
--:-- [Sound effects: A brief pause]
--:-- Gray Chapman: And it was kind of my first brush with like burgers that had aioli on them. Or like, you know.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Back then, online food ordering was mostly defined by local startups like Zifty.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: As more and more people like Chapman started noticing the apps, so did more entrepreneurs and investors.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Customers saw fancy burgers. Startups saw the potential for huge paydays.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: I think the delivery landscape really shifted around 2010 and onwards so those teen years
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: This is Amanda Kloot editor of Eater So Seamless and Grubhub had been around in 2004 and 2005 but all they did basically was aggregate menus into a website and connect customers to delivering restaurants.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: They didn't yet provide their own drivers.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Once you get to 2011, you get Caviar and then DoorDash and Postmates and Uber Eats.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: And that's when you saw so many people enter the business and it kind of exploded from there.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: It was inevitable in a way.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: The tech industry introduced convenience culture for so many other aspects of our lives.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: With Amazon Prime, I can get toilet paper by tomorrow.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: If my kid asks me a question, I can Google it and tell him the answer immediately.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: I can pull up any song on my phone immediately.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: There's this immediacy to our lives now that just did not exist before technology entered the fray.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: And I think that translates very easily and seamlessly to food.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: It's not like the apps invented the concept of getting food immediately.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Chapman could have always ordered a pizza to the Doggy Hotel.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: But she couldn't have gotten a turkey burger with aioli.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: On-demand delivery like this caught on with people, like a lot of people.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Looking at the numbers is astounding.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: The NPD Group, which is a market research company, has been tracking the number of orders made through the delivery apps for a while now.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: And if you look at the period from May 2017 to April 2018, more than 400 million orders came through third-party apps.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Now, compare that to the same period in 2020, more than 3.5 billion.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: I'll do the math for you, that's a 775% increase.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Which means for a lot of us, delivery has become more of a habit than a treat.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: But not for Chapman.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: I have made a concerted effort to just, like, do takeout more, as opposed to having it brought to me.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: It's been a decade since Zifty opened up a world of possibility for Chapman.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: She's actually trying to order delivery less now.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Because, like many consumers, she has this growing awareness that small restaurants are struggling.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: And by ordering delivery, she might be part of the problem.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Here's Amanda Kloot again.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: I don't think it's totally reasonable or logical that we have so many options at our fingertips for so cheap.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Amanda is naming the big question about restaurant delivery here.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Who's footing the bill?
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: You may pay a delivery fee when you order food through an app, but often that's not really how much your delivery costs.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: The app and the restaurants are subsidizing your true delivery cost out of their own pockets because the delivery infrastructure is expensive.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: You have to pay a driver, there's insurance for the driver, the apps themselves are expensive to run, and those are just a few of the costs.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: So we consumers are getting a huge discount.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: Even if we pay, we're getting more than we pay for.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kloot: This dynamic can really sting for restaurants, especially when they feel that their businesses are bearing more of our costs than the apps.
--:-- [Sound effects: A brief pause]
--:-- Christopher Puglisi: Basically, it's like I have a new partner.
--:-- [Sound effects: A brief pause]
--:-- Christopher Puglisi: Their partner's name is Grubhub and the other, you know, Uber Eats.
--:-- [Sound effects: A brief pause]
--:-- Christopher Puglisi: And they're all taking their 20, 25 percent cut.
--:-- [Sound effects: A brief pause]
--:-- Christopher Puglisi: And I'm in business with them because I have no choice.
--:-- [Sound effects: A brief pause]
--:-- Christopher Puglisi: Support for today's show comes from Adio.
--:-- [Sound effects: A brief pause]
--:-- Host: What is Adio?
--:-- [Sound effects: A brief pause]
--:-- Host: Adio is an AI native customer relationship management system built specifically for the next era of companies.
--:-- [Sound effects: A brief pause]
--:-- Host: They say it's extremely powerful, adapts to your unique data structures and scales with any business model.
--:-- [Sound effects: A brief pause]
--:-- Host: According to Adio, Adio takes less than a minute to set up.
--:-- [Sound effects: A brief pause]
--:-- Host: And within seconds, you will have your email and calendars synced.
--:-- [Sound effects: A brief pause]
--:-- Host: You'll see all your relationships in a fully fledged platform, they say, all enriched with that actionable data.
--:-- [Sound effects: A brief pause]
--:-- Host: And they say you can build AI-powered automations and use its research agent to tackle some of your most complex processes to seize so that you can focus on what matters, building your company.
--:-- [Sound effects: A brief pause]
--:-- Host: You can join industry leaders such as Flatfile, Replicate, Modal, and so much more.
--:-- [Sound effects: A brief pause]
--:-- Host: You can go to adio.com slash todayexplained to get 15% off your first year.
--:-- [Sound effects: A brief pause]
--:-- Host: This message is brought to you by Apple Card.
--:-- [Sound effects: A brief pause]
--:-- Host: Each Apple product, like the iPhone, is thoughtfully designed by skilled designers.
--:-- [Sound effects: A brief pause]
--:-- Host: The titanium Apple Card is no different.
--:-- [Sound effects: A brief pause]
--:-- Host: It's laser etched, has no numbers, and it earns you daily cash on everything you buy, including 3% back on everything at Apple.
--:-- [Sound effects: A brief pause]
--:-- Host: Apply for Apple Card on your iPhone in minutes.
--:-- [Sound effects: A brief pause]
--:-- Host: Subject to credit approval, Apple Card is issued by Goldman Sachs Bank USA, Salt Lake City branch.
--:-- [Sound effects: A brief pause]
--:-- Host: Terms and more at applecard.com.
--:-- [Sound effects: A brief pause]
--:-- Host: Today Explained, Rahm's firm food delivery apps.
--:-- [Sound effects: A brief pause]
--:-- Host: You know who. DoorDash, Seamless, Uber Eats, Caviar and Company, they have quickly become an essential part of a lot of our lives.
--:-- [Sound effects: A brief pause]
--:-- Host: But how do all the restaurants feel about them?
--:-- [Sound effects: A brief pause]
--:-- Host: And what is the cost of all that convenience?
--:-- [Sound effects: A brief pause]
--:-- Host: These questions and many more are answered in the latest season of the Land of the Giants podcast from the Vox Media Podcast Network.
--:-- [Sound effects: A brief pause]
--:-- Host: The new season is called Delivery Wars.
--:-- [Sound effects: A brief pause]
--:-- Host: And today we're bringing you episode one of that new season.
--:-- [Sound effects: A brief pause]
--:-- Host: and subscribe so you can hear the rest.
--:-- [Sound effects: A brief pause]
--:-- Host: Once more for The Road, the show is called Land of the Giants, and this season is called Delivery Wars, but all you need to find it is Land of the Giants. Take it away.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: So just, can I get an everything, a whole week, um, cinnamon and raisin?
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: One of the things that I love about a classic New York bagel shop is when your order is taken down by hand on a scratch pad.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: All right, I got that.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: At Tompkins Square Bagels in Manhattan, that scratch pad tradition is still going strong.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Did I take your name?
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Christopher Puglisi is the owner of Tompkins Square Bagels, and he's been in the restaurant industry for years.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: He's old school, a scratch pad kind of guy.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: The digital future, where customers hardly interact with staff at all, Puglisi's suspicious of all that.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: He's all about the in-person connection.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: You can see it in the way he's designed the place.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: The walls are bright yellow and green, and there are vibrant paintings of New York City by local artists.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Customers can look into the kitchen as workers make the bagels by hand.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Oh my God, those are some pillowy soft bagels I see back there.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Oh, going into the water. That's so amazing.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: I love watching them.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: All right, so put this picture in your mind.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: The bagels are boiled and baked in the back of the kitchen.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: On the left, eggs and bacon are sizzling on the griddle.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: In the middle, there's an island where a staff member is slicing rows of bagels, putting egg or lox on, wrapping them up in foil.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: and then some of those sandwiches go to the front of the house, fulfilling those orders written on scratch pad.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: But other orders go sideways to the bar countertop.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Who are you picking up for?
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Mario.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Mario.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: All right, cool.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: All right, so he's checking it off on his phone, taking off his bag.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: This area of the back was once intended to be a spot where customers could sit and eat and watch the food being made, much like what I'm doing.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: But Puglisi ripped out seating to make space for a waiting room for delivery workers.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: It wasn't meant for this.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Where you see these wedges, those were for bar stools.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: On the other side, you have Patrick.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Patrick is someone that Puglisi hired to manage the orders coming through the apps.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: I arrived at 8.30 in the morning.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: For an hour or so, I watched Patrick setting out orders to delivery drivers consistently.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: He wasn't really interacting with customers or even other staff.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: He was interacting with three or four different iPads primarily.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Each delivery app requires its own device and a printer pumping out receipts.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: During rush hour delivery times, it can get chaotic.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: On a Saturday, Sunday, it'll just be lined with bags.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: And one after the other, guys and doordashers will come and pick up orders.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Puglisi says before the pandemic, delivery wasn't really a priority for him.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: About 20% of his orders were delivered via third-party platforms.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: But then, in March 2020, the pandemic shut down the city.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: And when it looked like indoor dining wasn't coming back anytime soon...
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: I went into, like, fight or flight, and I was like, I have to survive.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: What am I going to do to survive?
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: He had to make some compromises.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: One of the things I did was join every third-party app that I could.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Now you can order his bagels on Grubhub, Seamless, DoorDash, Uber Eats, Chow Now, and a couple of other apps, too.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: And Puglisi admits the apps helped him get online.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: I know I would never have been capable of setting up this system that they have myself.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Puglisi was able to start delivering to a wider zone of customers.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: I know that they've invested a lot of time and money into developing their customer base and their platforms.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: And they've come up with great ideas.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: I don't knock them, and they are a necessity.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: And I probably wouldn't have survived the pandemic without them.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Like I acknowledge all that.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Over half of Puglisi orders are now online orders.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: He needed to adapt to the moment and made some tough decisions.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: He said he had to lay off 30 members of his staff and he narrowed down his menu.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: That how he was able to remain profitable during the pandemic.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: But that mean he happy.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: The iPads in the back that wasn his vision for the store.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: He wants the scratch pad vibe, talking to regulars, getting to know their stories.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: And beyond losing touch with his customers, Puglisi has another problem with delivery apps.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: The other thing that I don't like is how they sort of, you know, and I'm Italian American, so I like to use the mafia reference.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: But they, I'm sorry, but it's very mafia-esque, very like, hey, pay up or you're not going to make any money.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Third-party delivery apps charge restaurants commission fees every time an order comes through an app.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: And that is Puglisi's big problem with these services.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: They take what he feels is far too big a cut.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Puglisi shared an itemized list of orders with us that came through the DoorDash app in the month of January.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: On January 31st, at around 9.30 in the morning, a typical order came into the bagel shop through DoorDash.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: The app charged the customer $11.95 total for the base order, probably a bagel, cream cheese, maybe some lox.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: The customer paid a delivery fee and a tip.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: But Puglisi had to pay too.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: DoorDash charged him a commission fee of $2.39 on the order, 20% of the total.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: And that 20% commission fee kicks in on every single delivery order that a customer places at Puglisi's restaurant through DoorDash.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: These fees add up.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Puglisi showed us a Grubhub bill from last year.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: $75,000 in orders, $15,000 in commission fees.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Again, 20%.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Puglisi says he could see paying a smaller fee, maybe 5-10%.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: The apps do bring in more customers.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: But...
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: From a business that already has small margins, when you start going to 20, 25, 30 percent, you've gone way, way over the line.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Like you're basically now we're the horse and you're whipping the horse.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: That's my problem.
--:-- [Sound effects: A brief pause]
--:-- Andrew Ding: Razor-thin margins.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: This is a really common refrain.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: The restaurant owners we talk to speak about the small wiggle room for profitability.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: So they criticize these double-digit commission fees, especially during the pandemic.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: During the pandemic, New York City Council passed an emergency cap, which prevents delivery apps from charging more than 20%.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: That's why Puglisi's rate is 20% right now.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: He acknowledges it's a big weight off his back.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: But the commission fee could be higher for restaurants in other cities.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: The apps are generally against government caps, but they say they're listening to the toll commissions are taking on restaurants.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: In April, DoorDash announced a tiered fee structure.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Restaurants could opt into a 15, 25, or 30% commission fee, with the lowest tier being pretty bare bones.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: A smaller delivery radius and a higher delivery fee, covered by the customer.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: This ranking practice isn't new, though.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Grubhub has had tiered pricing for years.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: But the drawback of less commission is less reach, less promotion.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: And Puglisi doesn't like this system either.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Kick your money up or we're going to bury you.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Like, hey, if you agree to pay 25%, you'll come up first on all the searches.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: And if you don't, you know, you're going to be like 10th.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: And it just gets more and more and more.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Puglisi feels like working in the system means you're damned if you do and damned if you don't.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: But a few miles uptown, another restaurant owner is experimenting with ways the system can work for him.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: The expat, this is Carol.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: The expat, like any restaurant, gets a lot of calls.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: And not all of them are orders.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Actually, the majority are just questions.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Yes, hi.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Listen, the barbecue fried rice with the barbecue pork, is that a small order or a large order?
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Well, it's pretty filling.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: These questions can get surprisingly intimate real quick.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Listen, I'm like 250 pounds.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: I'm a power lifter.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Is that going to be, I would need probably two orders of that, right?
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: In that case, probably, yeah.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: You just heard something important in that call, more than an oversharing customer.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Because when that bodybuilder called the number for the expat he found online, he probably thought he was calling the restaurant directly.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: And he got through to the expat like he wanted.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: But, and this is key, the phone number was routed through a third-party app first.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Which means the restaurant was charged a commission fee for this call.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: It's a charge that Andrew Ding, the co-owner of the expat in Harlem, discovered in spring of 2020.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: He was reviewing his Grubhub bill and noticed that he had been charged about $380 for orders that came through over the phone.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: And then I was just like, okay, well, let's just see what the calls were.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: You know, let's listen to them.
--:-- [Sound effects: A brief pause]
--:-- Amanda Kluht: Ding opened up his Grubhub account and went to the page where all the phone calls were recorded because restaurants can get access to the calls they
