Third-party vs. direct delivery: Debate reaches boiling point amid coronavirus

Before the novel coronavirus outbreak, delivery was barely a blip on the radar for Ivan Lee, co-owner of Hawaiian grill Aloha Eats in Chicago. The family-owned restaurant only took delivery orders over the phone, which were completed by a grassroots team of drivers who delivered for a handful of area restaurants, and diners had to pay in cash. 

But when Chicago announced its stay-at-home order, Lee knew he had to pivot to online ordering — and fast. His restaurant had already used Upserve for years as a POS provider, and now leverages the restaurant management software to accept credit cards and process online orders for delivery. 

There was one change Lee wouldn’t make, however: partnering with a third-party delivery platform.

“We’re already a high-value restaurant where we dish out much bigger portions than we really should — I thank my father for that legacy,” Lee said. “The cost of food and labor, you add it all up… we’re already hustling for that slim margin, I mean all we’re doing is breaking even. We would not have stayed in business for the 16 years we have now [with a third-party]. It’s just not worth it.”

Aloha Eats doesn’t have to pay commission fees to Upserve, which instead charges a monthly flat rate to its restaurant partners. Lee says his restaurant’s current cash flow — and lack of layoffs — is possible because there isn’t a major brand taking a cut of each delivery transaction, and he continues to work with the local group of delivery drivers instead.