Is the New Coronavirus Really Spurring a Boom in Food Delivery?

With thousands of tech employees working from home, kids out of school, events cancelled, and large gatherings banned, many restaurants and diners seem to be anticipating a boom in takeout and delivery. It’s certainly happening for the grocery business, where brick and mortar stores have been cleared out with people panic buying toilet paper, and online grocery company Instacart reporting that for the month of March, California sales multiplied by a breathtaking factor of 20, according to the SF Business Times. But is the same really true for restaurants?

Unfortunately, it’s a more complicated story for restaurants, which balance their businesses between sit-down customers, smaller takeout and delivery orders, and larger catering and events orders. In terms of a supposed delivery boom, “Our numbers don’t reflect that, at least not yet,” Korey Reynolds, director of people of Tacolicious, tells Eater SF. “For now, takeout and delivery seem to be steady, but overall sales are declining. We thought we would see a much larger uptick, but it’s not what we thought it might be.”

Tacolicious’s six locations are known as a delivery favorite for items like guajillo beef tacos and Marina girl salads. Reynolds says that generally, their business is 60 percent in house, 20 percent delivery, and 20 percent catering. “There’s been a sharp decline in general business, and that definitely fluctuates by neighborhood and location,” he explains. The Marina and Mission neighborhood locations have still been getting foot traffic, while the Palo Alto location around the corner from Palantir and the San Jose location on Santana Row have emptied in the absence of tech workers and shoppers. Tacolicious Chico, the quick-service restaurant that only opened in August, is in the same building as Uber, which sent office employees home. “That one’s hurting the most,” Reynolds said. “For every business around there, there are going to be some tough decisions.

Meanwhile, delivery orders are only holding steady, so they’re not offsetting losses. The bigger problem is that catering orders are getting cancelled. “We have lost tens of thousands of dollars in conference catering in the last week and a half,” Reynolds confirms. Searching for solutions, Tacolicious has lowered its catering order minimum from $500 down to $350, and it’s kicking in gift cards, so any catering order over $500 will receive a $50 gift card, and any catering order over $1,000 will receive a $100 gift card. “We’re hoping that this will all be over soon, and gift cards are still an option, and a wonderful thank you for waiting out social distancing.”

RT Rotisserie is a popular delivery option for its comforting rotisserie chicken, hearty sandwiches, and big salads, a fast-casual spinoff of Michelin-starred Hayes Valley restaurant Rich Table. With a second location that just opened in NoPa last August, the company’s intention is to increase the range for deliveries to western neighborhoods, and and to leverage a larger kitchen for catering orders. In general, chef-owner Evan Rich says the business is about 65 percent in house, 25 to 30 percent delivery, and 5 to 10 percent catering.

Rich is losing reservations and his lunch and pre-theater crowd, and seeing an increase in delivery, but only slightly. “We have picked up orders for individual deliveries, but big catering orders are down,” Rich qualifies. “We’re definitely feeling the impact, and business overall has sunk.” Rich says that for delivery, he usually gets maybe 120 to 150 orders a day at each location, and he’s now getting 175 to 200, but those order sizes are smaller and more individual. In contrast, for catering, he normally gets 2 or 3 big orders directly for the restaurants, which are a minimum of $200, plus a $25 delivery fee, plus 5 or 6 more big orders through Caviar. “Now, we’re lucky if we get one delivery order a day,” he says. “We’re finding other things for our delivery guy to do.”

Rich Table is also in a unique position, in that it just announced that it’s moving into a DoorDash virtual kitchen in Redwood City, in order to increase delivery and catering on the Peninsula. To be clear, that’s been in the works for a couple of months, long before coronavirus concerns were impacting food businesses. And while it might increase the range for delivery, really, it’s in prime catering territory, nestled in the valley with the big tech companies. Right now, the business is just getting started with the smaller delivery orders, and next week, they’ll start offering the larger catering orders. But with many tech workers now toiling from home, it might be a slow start.

For pizza delivery, Pizzeria Delfina is another popular option, known for pillowy pies topped with prosciutto and broccoli raab. Chef-owner Craig Stoll reported that across all of its locations, including Delfina and Locanda, business is down 30 percent, while its downtown location near Moscone Center, only open a little over a year, is down 50 percent, and delivery isn’t going to help. “We have not seen an uptick in delivery — in fact, we’re seeing a slight decrease,” Stoll said over email.

Farmhouse Kitchen is another popular delivery option for Thai noodles and curries, and partner Iing Chatterjee said that they’re seeing a slight drop in weekday and catering orders, they’re not seeing much of a difference for delivery.

These reports are sobering, especially given that many small restaurants are currently rushing to add takeout and delivery options, to offset other losses. But if delivery doesn’t boom as anticipated, it might not be the solution they’re hoping for. “I don’t see the numbers saying that we all need to do delivery,” Rich warns. “It’s a give or take. We’re up a little, but not significantly.” Rich Table is currently only doing delivery through Caviar, now owned by DoorDash, and he’s not planning to expand to more apps. “We’re not going to change our strategy right now. We’re focused on providing the best possible experience in our restaurants, so that when people start coming out from hiding in their houses, they’ll still be excited to support small businesses.”

Likewise, Tacolicious is sticking with existing relationships with Caviar, DoorDash, Uber Eats, and Grubhub in the South Bay. “What would be really nice is if delivery platforms could decrease that big cut that they take, and we didn’t have to pay up to 30 percent in commissions,” Reynolds voiced yesterday. As of this morning, he might be getting his wish: On Friday, GrubHub announced at a Chicago press conference that it would be temporarily waiving “certain fees it charges to ‘independent’ restaurants” in Atlanta, Chicago, New York, Portland, San Francisco, and Seattle. Details were scarce on what this actually means — according to Eater Chicago’s Ashok Selvam, Grubhub CEO Matt Maloney said that only “marketing fees” would be suspended, a figure that’s reportedly about 15 percent of the 20 to 30 percent commission the delivery company charges businesses.

It’s also unclear what “independent” means, in this case: Selvam says that he posted this question at Friday’s media event, and was told that the company is working on a determining which restaurants qualify, but had yet to offer specifics. A call from Eater SF to a GrubHub spokesperson had not been returned as of publication time.

It’s likely that the move will increase pressure on other companies, to follow suit: In fact, on Friday New York City Council member Mark Gjonaj said in a press release that “my office and I have already begun conversations with other third-party food delivery providers such as DoorDash, Postmates and Uber to ask them to reduce their fees and implement other relief measures as restaurants cope with an unprecedented loss in business.” San Franciscans can likely expect similar announcements from local officials in the coming days.