dinner plans usually look like this.

You look up your favorite local restaurant

on an app like Uber Eats or Deliveroo

if you're in the UK, place an order,

track it on the map, grab the bag from your doorstep

and voilà, dinner delivered.

But sometimes in those bags,

restaurants include notes like these

encouraging customers to order directly from them next time.

That would mean

they don't have to pay delivery companies

commission fees of up to 35%.

Restaurants around the world

have organized to push delivery services

to lower their fees.

While recognizing these apps have become very important.

- They are massively crucial

but grudgingly crucial actually (chuckles)

it's hard giving away your hard-earned cash to a platform,

but yeah they're keeping us afloat.

- [Narrator] While restaurants have been struggling

with the pandemic, delivery services like

Uber and DoorDash have boomed.

By the end of 2020 food delivery spending

had more than doubled compared to 2019.

But spending at restaurants was down roughly 5%.

- That will be the legacy of the pandemic in this sector.

Everyone had to change their behavior overnight.

- [Narrator] So are delivery apps,

helping restaurants or hurting them?

The food delivery market as we know it

actually started about 20 years ago,

when Grubhub in the US and Just Eat in Europe,

entered the market.

- The generation one operators,

the roots of this business model

we're working with independent restaurants

and independent restaurants that had existed for decades

prior to the platform coming along.

I got my Deliveroo bag and my bike

and I'm gonna spend a couple of hours doing some orders.

- [Narrator] Giles Thorne researches

European internet companies for Jefferies

and to better understand the food delivery industry

he spent some time actually making deliveries

for Deliveroo in the UK in 2019 and 2020.

- Everything changed in around 2016, 2017

because the generation two competition came in

and these were delivery led.

These were platforms like Deliveroo, like DoorDash,

like Uber Eats that saw the consumer value,

the utility of an online food delivery app

and that the branded chains, the big restaurants

not the independent pizza parlor in London

but the McDonald's three doors along

would also benefit from the utility

of this type of platform.

- [Narrator] There are a lot of companies

vying to take control

of the food delivery industry right now.

The global market was projected to be

worth $285 billion in 2020.

Margins are low meaning despite high demand

delivery companies mostly operate at a loss.

- The reason why a platform

will not be making money at this point in time

is essentially because they are in a competitive market.

♪ Did somebody say Just Eat ♪

They are having to spend a large amount of money,

primarily through marketing

to get consumers, to download the app and start using them.

The platform says, right,

I got three other guys in my market

by the of next year I wanna get two of them to exit.

So I'm gonna spend a hundred million dollars

buying up every billboard.

And I'm gonna send a message to the other guys

that they are not gonna get traffic.

And that's the logic.

That's why people don't make money.

- [Narrator] Since the delivery market's inception

there has been a lot of consolidation.

Just Eat has undergone six major mergers and acquisitions

in the last five years.

Last year, it was acquired by Takeaway.com

which then acquired Grubhub for $7.3 billion

in the US Uber Eats acquired Postmates

for 2.65 billion in stock.

(bell ringing)

In December, 2020 DoorDash went public.

By the end of the year

the company was worth at least $50 billion.

Uber, DoorDash and Grubhub now control roughly 98%

of the overall US food delivery market

in terms of transactions.

In the United Kingdom, Uber Eats, Just Eat and Deliveroo

are among the most popular food delivery apps.

One restaurant working with delivery services like these

is Tai Kitchen in London.

- We set up the business just before COVID hit.

We literally were open

a week before the pandemic.

- [Narrator] The owner Richard Poole

has relied on services like Uber Eats and Deliveroo

to keep the restaurant alive

during various levels of lockdown since March, 2020.

- Those plans were in the pipeline

when it came to us having, eat and service

and having that extra revenue stream

but obviously that went to part.

So we had to improvise.

- [Narrator] Tai Kitchen also offers its own service

for in-store collection.

- We had to have our own delivery service

but obviously it's a lot...

The logistical nightmare of having your own delivery service

it's real.

It's a real challenge.

That's why we outsource it to Deliveroo and Uber Eats

to deliver our food.

Another thing is Deliveroo and Uber Eats,

they basically own all the drivers (giggles)

It's very, very hard to find independent.

Well, technically they are independent, right?

But it's very hard to find someone who'd come over

to work with you.

Do you know what I mean?

'Cause basically, they own the fleets.

- [Narrator] Uber Eats has nearly 5 million drivers

and delivery people globally

and DoorDash has over 1 million.

Most apps offer restaurants,

a range of services

from just helping facilitate online ordering

to actually delivering the food.

If the app handles the delivery

the fees can range from 10 to 35% of the total order.

- The whole balance of deliveries and take-aways.

But right now it's like 80% deliveries

like the whole 85 from our point of view.

So I think let's say to improve things would be

more people actually coming to collect.

So you come collect an order

you basically gave the restaurant,

a hundred percent of the revenue.

- [Narrator] These tensions over commission fees aren't new.

McDonald's franchisees have complained publicly

that Uber Eats erodes their margins.

While Uber has said it offers some large restaurant chains

a lower service fee.

In 2019 representatives from the two companies

said they reached a new deal.

And since the pandemic hit

various regions in the US including New York, LA

and Philadelphia have temporarily capped delivery fees

for restaurants at 10 to 15%.

DoorDash has said the commission caps

ultimately restrict restaurant choice.

Precisely when restaurants need the full range of options

to help their businesses survive and thrive.

Some restaurants are even working out of ghosts kitchens

where they cook food exclusively for delivery services.

- At Uber Eats, drivers have switched off their hailing apps

this weekend to demand better treatment

from the food delivery service.

- [Narrator] Delivery apps have also come under pressure

from gig workers, demanding better employment protections

including better wages and sick pay.

The CEO of Uber

recently called for dialogue

but said its delivery app allows workers to make money

in a flexible way.

DoorDash Grubhub and Uber Eats told the Wall Street Journal

they've provided drivers with various PPE.

And Just Eat said it supports contact free delivery

and has given restaurants reduced commission fees

throughout the pandemic.

As these companies have become a key part

of many people's lives, regulators are watching

to see the impact on competition, consumers,

delivery drivers and restaurants

- It's very hard to see our money go

like that amount go to them

but again, credit where it's due

they are keeping us afloat.

So even with the commission rates, being that high

if it wasn't for them, we'd actually have to shut.

(soft music)