Food Delivery Apps – Good for Business?
July 18, 2018 By: Paul Taylor-Sussex Read Time: 3 minutes
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There are now dozens of ways to get food delivered to your home. While delivery has long been associated with pizza, now you can order everything from Mexican to Malaysian to McDonald’s, all without even lifting yourself off the couch.

Food delivery app

The traditional method of calling up your favourite restaurant and placing your order directly is increasingly being replaced by food delivery apps such as SkipTheDishes, UberEats and Foodora. Just last month, California-based company DoorDash launched their app in the Ottawa area.

These apps enable food lovers to order a meal from the comfort of their home with just a tap on their phone. For customers, this method promises convenience and fast delivery. And for restaurants, the apps claim to increase profit by broadening customer reach, and reducing marketing costs.

However, these apps have their fair share of critics. In fact, a New Yorker article in February argued that not only are food delivery apps hurting restaurants’ bottom lines, they may even force them out of business.

In an industry known for its slim profit margins, are food delivery apps actually good for the restaurant business?

Under duress?

Given the promise of more customers and greater profit, some restaurateurs feel like they have no choice but to submit to this new reality.

The main issue is the service charge. Most apps work by charging a fee for each delivery, usually a percentage of the total cost of the sale, covered by the restaurant (the customer pays a separate service charge). The charge to restaurants can be steep: UberEats currently takes a 35 per cent cut from each order. This is a significant chuck out of a restaurant’s profits.

Restaurant owners have likened food delivery apps to a drug addiction: businesses build up a dependence on these kinds of food orders, even though in the long run they know it might not be financially healthy for them. One Toronto restaurateur was recently quoted as sayingIf it wasn’t for the massive amount of people who use Uber and Foodora for takeout, I would love to drop them.”

As delivery becomes the more preferred option for food lovers, some restaurants have reported a decrease in patrons physically coming in to dine at their restaurant. While this is not surprising, for many businesses dine-in customers are their bread and butter, and are considered to be more profitable than having a third party order and pick up the food.

While many restaurants have reported a marked increase in customers and profit, the issues above can mean that food delivery apps are not a perfect fit for every business.

IP issues

Restaurant owners have found that some food delivery apps have included details of their business on the app, including their logo and menu items, without seeking permission. Most delivery app companies reach out to prospective restaurants before adding them to the app, but some do not.

A recent CBC article found that DoorDash has added a number of Ottawa restaurants without asking for approval. One restauranteur believes that for DoorDash it is “a relationship between themselves and their customers, the people ordering food. They don’t see the restaurants as part of that equation”.

This can have intellectual property repercussions if a third party is including your restaurant’s name, logo and menu details on their app. For example, if your restaurant name has been trademarked, then an individual or company needs to seek permission from you in order to use that name.

In addition, third-party food delivery can affect a restaurant’s brand. Drivers working on behalf of these apps may not be vigilant at ensuring the food remains in good shape and at a suitable temperature while in transit. Customers who receive poor quality food due to the delivery methods may think twice before ordering from that restaurant again. Indeed, some restaurants won’t even deal with food delivery apps anymore, as they see it as so damaging to their brand.

What can a restaurant owner do?

Clearly food delivery apps have the potential to increase patronage for restaurants, and many businesses can testify to the positive difference that these apps have made.


However, restaurant owners should be vigilant at making sure the information on these apps, such as menu items and logo, is correct. And at any time you wish to opt out, you can usually do so by contacting the delivery company directly.

If you are having serious issues dealing with these food delivery apps, consider consulting a lawyer. After all, brand protection is incredibly important to a business, and once that brand has been damaged, there can be a long recovery time.

For more information about trademarks and brand protection, contact our Intellectual Property Group.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2018 Nelligan O’Brien Payne LLP.