COVID-19 forced many restaurants to rely on third-party delivery services to stay alive. Companies like DoorDash and Uber Eats offer both e-commerce and operational solutions to many businesses. But that relationship proved to be a double-edged sword for restaurants. The industry became reliant on e-commerce while many small businesses paid commissions to delivery companies to keep the lights on rather than building their own e-commerce presence. This stunted the growth of many businesses that otherwise may have been able to transition into the digital economy more easily.
For example, a fine Italian restaurant on Melrose Ave. in Los Angeles, California recently vented on Instagram about both losing money during the pandemic and paying $35,000 in delivery fees. That’s money that could have gone to building a digital presence. Instead, delivery apps accounted for up to 74 percent of the restaurant’s business in December 2020, the Los Angeles Times reported.
Now that vaccine distribution is ramping up and local restrictions are being lifted across the country, restaurants are looking for a way to regain control over their e-commerce and delivery operations.
To that end, New York-based software as a service company Wix is acquiring SpeedETab, an ordering technology provider. This partnership will further expand Wix Restaurants by providing a full online experience for restaurant owners.
Prior to the acquisition, Wix Restaurants allowed businesses to create a menu and take table reservations. With SpeedETab under the company’s umbrella, the service now allows restaurants to take payments from customers without paying a commission.
Now, Ronny Elkayam, Wix’s Senior Vice President of Strategic Products says restaurants are empowered to streamline orders and delivery services that fit their brand, not someone else’s.
“It’s more vital now than ever for restaurant owners, from small, local, and family-run to fine dining and multi-locations, to optimize their services with a strong, reliable online presence,” he said in a statement.
“We’re excited to bring the online expertise of SpeedETab to join our mission of providing the best online platform for restaurants. Wix Restaurants is already the leading industry solution, and now our combined platform will provide a high-value product for the new era of the restaurant industry,” Elkayam continued.
Much like the advent of third-party delivery, e-commerce stands to revolutionize the restaurant industry. Data analytics company Sansa predicts that e-commerce usage among restaurants stands to see a 46 percent growth over the next two years. Similarly, DigitalCommerce360, a digital economic research firm, found that e-commerce usage grew 44 percent last year, representing 23 percent of all retail sales in the U.S.
Restaurants were at the center of this growth as well. Uber Eats reported in June 2020 that its food delivery service had outgrown its ridesharing service. Meanwhile, DoorDash reported in its Initial Public Offering paperwork with the Securities and Exchange Commission that it earned $1.92 billion through the first three quarters of 2020, which is more than three times greater than the same period in 2019.
However, issues quickly emerged as the rapid growth did not translate into increased quality of services in many instances. In one class-action lawsuit, DoorDash admitted to creating landing pages for several restaurants that did not partner with the company. DoorDash then used its market-share and SEO prowess to boost its landing page over the non-partnered restaurant’s own websites. When customers would try to order through DoorDash’s platform, it would generate an error message. This led to the presumption that the restaurants were a partner but were closed.
Cities tried to help their small businesses by restricting the commissions third-party delivery companies could charge their local partners. In some cases, the commissions were as high as 35 percent. Many cities capped the commissions at 15 percent. The City of Santa Monica won a judgement against DoorDash to enforce its order that charged the company with 23 separate violations of the policy.
Many delivery drivers reported fearing that the companies would retaliate against them for the local commission caps. Instead, some companies responded by implementing local fees in lieu of commissions. In Denver, DoorDash charged customers an additional $2 just for living in the city.
For SpeedETab CEO Adam Garfield, the days of restaurants relying on third-party delivery companies are numbered. Partnering with Wix not only allows his company to offer better service to its clients, it also allows restaurants to better serve their community.
“We are thrilled to join the Wix Restaurants team and provide an amazing solution for restaurants around the world,” Garfield said in a statement.
“Since its inception, SpeedETab has been focused on empowering restaurants to increase revenue, engage with their customers, and provide a superior guest experience. As part of Wix Restaurants, we look forward to making it easier than ever for any restaurant to have all the digital tools they need to succeed in one place,” he continued.