April 2020 - ciaooo!

Earlier this week, Food and Wine unleashed a scathing article on multi-million dollar funded delivery apps like Grubhub (Seamless), Postmates, UberEats, or Doordash (Caviar).

Amidst the pandemic, there has been a resurgence of supporting small businesses in NYC. While consumers think that they’re supporting local restaurants by ordering delivery/takeout — the apps are taking a WHOPPING 20 – 30% commission from restaurants (which are already struggling to survive). The struggle is felt across all businesses, included famed restauranteur, David Chang of Momofuku who said he had to lay off over 800 employees from his 16 restaurants this past week.

RESTAURANTS BY THE NUMBERS

New York restaurants accounted for $51 Billion in revenue last year and over 865,000 jobs or 9% of all employment in the state.
Over 50% drop in restaurants spend since late March compared to 2019
New York received $20 billion of the $350 billion in the Small Business Administration’s emergency coronavirus relief fund. The funds ran out within 5 minutes of launch.

While many apps have stated that they’re “deferring fees” from small businesses…restaurants will still be on the hook for those fees later on. Sadly, experts think that 75% of restaurants won’t be able to survive this pandemic.

In response to the fees, a TJ Hyder, manager of Benny’s Burritos stated:

“Our margins are minuscule, we only do delivery because our restaurant has been doing it for 30yrs…on average we see about a 3% profit in deliveries from using the apps if there’s no increase in product costs in imported items like avocado”

While apps like Postmates, Doordash, and UberEats send their own delivery personnel, some business owners have stated that it’s the only way to offer delivery since they do not have any staff at their restaurants. Additionally, for couriers, it’s a way to make money. Seamless and Grubhub however, only offer “exposure” to their 3 million+ customer base.

Want the latest scoop? Click here to sign up for our newsletter!

TJ Hyder responded,

“It’s a double-edged sword, but they do not have to charge these ridiculous rates because the guests end up paying for it. Many restaurants increase each product price on their menu by $1-$3 in order to survive these ridiculous commissions charged by these companies.

Meanwhile, in San Francisco, Mayor Breed dropped a 15 percent cap on commissions from food delivery apps. Grubhub in return, dropped this tone-deaf email to its users asking people to repeal the cause.

New York could follow in SF’s footsteps with a 10% cap, but no word yet. All in all, there’s no pretty answer. While yes, you can delete the apps, you might be f***ing over some businesses that don’t have delivery people or access to the audience or couriers in need of work.

Chef/Restauranteur Sean Olnowich had this to say:

“To abandon the apps is basically shooting yourself in the foot. Stick with the apps, try to steer people more towards Doordash / Caviar, and encourage people to push their local city council members, Mayor, local congressman, etc to push the bull through to put temporary caps on the delivery fees”

Here’s how you can you actually support small businesses

Call up the restaurants and order DIRECTLY from them.
Buy merch or gift cards for future use.
Donating to a restaurant staff’s Venmo or GoFundMe, or a fund to feed frontline workers.
Or by calling your representative (If the restaurant is only selling via delivery apps, Caviar seems to be the fairest option.)

Here’s a list of some restaurants still open and offering delivery/takeout options in Chinatown, and Flushing.

On a positive note: Some restaurants are finding clever ways of staying in business and doing good. A restaurant in Brooklyn kept its lights on by partnering with a senior citizen home to prepare meals for over 400 seniors who have to remain indoors. Spots like Regina’s, 886, Ho Foods and more are using donations to prepare foods for hospital workers.

Facebook Conversations

When Twitter Fingers Become Trigger Fingers
Since March, governors have been left to fend for medical supplies for their states as Coronavirus cases piled up. The madness was exacerbated when Trump refused to utilize the Defense Production Act to produce ventilators and supplies (but was ok to keep the meat industry despite Corona concerns).

Amidst the search, NYS called for any business who was able to produce materials to do so, and they would be paid accordingly. Governor Cuomo allowed the state to pay for medical supplies on-demand before an order was completed to speed up the process. Of course, the search for vendors was amplified on no other reliable source than, good ol’ Twitter.

But Wait! There’s More!
3 days after a tweet by electrical engineer Yaron Oren-Pines in response to Donald Trump’s call for supplies in late March, a deal was signed for 1,450 ventilators at a price of $47,656 per ventilator. That’s TRIPLE the standard retail price of high-end versions! But none of the ventilators ever showed up.

We Got DUPED
Nearly a month later, New York has terminated the contract, and the state is now trying to recover the $69 MILLION DOLLARS it paid the Silicon Valley electrical engineer. Between March 19 and April 27, NYS wrote out over $735 million for medical supplies – most of which were given to firms with little or no apparent experience in medicine. Desperate times call for desperate measures, but this is just sad.

Facebook Conversations

WhatToOrder is the only dining resource that starts by showing you every single restaurant in your chosen location and does so without altering the ranking of results in any way. Download the app HERE for free.

“The fire captain called me up and told me, “Thank you for taking care of us. Even before Corona. You guys have always looked out for us”.

Joe Paolillo Jr, one half of the A&S Fine Foods Pork Store in Gravesend, Brooklyn is shouting to me over the phone over the hustle and bustle of employees prepping in the kitchen. Of the 20+ businesses we’ve spoken to since the quarantine has been put in place in NYC, this, is by far, one of the busiest.

Since the Pandemic hit, aside from their regular clientele, A&S has fed every single area hospital, fire department, and police station, even partnering with The Mets to feed workers. They’ve pivoted their business from catering and sales of fine Italian meats, and prepared foods to also, delivering fresh fruits, vegetables, and groceries to the neighborhood. For Easter, the group also drove around the neighborhood dressed as the Easter Bunny handing out treats to kids (while socially distancing, of course).

The impact of a small business on their community is most relevant now. Multitudes of restaurants have stepped up, providing much-needed resources to their communities where the government has failed.

It’s a jarring difference considering newscasts have reported that 75% of restaurants will be shut down for good after the Pandemic. NYC legends like Lucky Strike, Pegu Club, and Gotham Bar and Grill all closed permanently, that citing loss of income, lack of federal loan support, and an overall drop in clientele. For neighborhoods like Chinatown, those numbers are even higher.

We first profiled A&S Fine Foods last year, the 50-year-old shop manned by father and son duo, Joseph Paolillo Sr, and his son, Joe Paolillo aka Joe Pork. Pre-pandemic, the shop was a neighborhood staple, with loyal customers returning from all across the country, and having visited the shop across generations.

In an earlier report inspired by this Food and Wine article, we wrote about the predatory commission fees by food delivery apps like Seamless, UberEats, Caviar, and their effect on small businesses.

Several of the restauranteurs we interviewed described the apps as a double-edged sword – they needed the brand awareness, and for some, the delivery drivers, but the 25 – 30% commissions were simply eating away into their margins.

TJ Hyder, General Manager of Benny’s Burritos in the West Village mentioned, “After all is said and done, we make a 3% profit margin on deliveries”. On a $25 order (not including taxes or delivery fees), that’s a profit of 75 cents.

On top of that, the commission percentage each restaurant agrees to pay has a direct impact on its default search ranking, meaning the more you pay, the higher your rank. When you’re searching for a burger to order, you’re not seeing the closest shops to you, you’re getting whoever paid the most.

For the mom and pop shops that rely on word of mouth, and are without social media savvy, or the extra funds to pay these sites, they get pushed to the bottom where they’re rarely seen, or perhaps, not even listed at all.

When you’re searching for a burger to order, you’re not seeing the closest shops to you, you’re getting whoever paid the most.

In a preliminary search, we did amongst some of the mom and pop shops in our neighborhood of Bensonhurst, Brooklyn, A&S did not appear once amongst UberEats, Caviar, or Seamless. Ironically, the closest and fastest delivery UberEats suggested in our area were the holy trinity of megacorps – Mcdonalds, Taco Bell, and Chipotle.

Think of it as a digital elephant graveyard, with older, smaller, or non-English speaking businesses getting royally shafted over. The discovery of a small business in a neighborhood is simply nonexistent online, nor in one place.

“Preserving the city’s culture of small, independent restaurants is a part of our mission long before the lockdown. This is why we list as many restaurants as we can in all five boroughs, including many places that can’t afford to maintain a website”
Rob Fraley – founder of WhatToOrder

Rob Fraley, the founder of WhatToOrder hopes his new app can help solve this. Unlike traditional sites that use a “pay to play” type search methodology, the site has an open search engine for finding food and restaurants, sans ads, and sans reviews. This gives every restaurant, no matter how small, a fair opportunity to be seen.

Using the app, you can still access any of the delivery apps and even check to see if the shop has its own commission-free online ordering system instead of calling up the place directly to save them the fee.

You can also search by more specific criteria, like dish name, ingredient combinations, reservation, and delivery partners, even offering 20 dietary and environmental filters like gluten-free, dairy-free, grass-fed, and GMO-free. It’s a free and fair marketing and distribution channel for restaurants (and a fun discovery tool for you to find what’s good in your area).

Democratic, but like, actually democratic.

On top of that, the app includes thousands of restaurants across all five boroughs, not just the hot spots with a good marketing budget. For some of the most affected businesses like Chinatown with several cash-only, non-digital shops, WhatToOrder could be just the saving grace they need to get online in front of many eyeballs, quick.

“To support the small, independent places, you first need a way to see who’s still offering takeout right now”

Using the app, you can still access any of the delivery apps and even check to see if the shop has its own commission-free online ordering system instead of calling up the place directly to save them the fee. It’s a Win-Win!

Small businesses are essential to keeping NYC alive. It’s how a Korean Uzbek keeps her culture alive at Cafe Lily. It’s where families get together for their Sunday fix of Indian food at Jackson Diner. It’s where neighbors can call A&S and be greeted by Joe Pork, or Matt, and a friendly face and for a moment feel like everything is back to normal again.

Small businesses build communities, and up to now, there hasn’t been one place to show them. Until now.

You can download the app WhatToOrder for free HERE. Know a small business that might benefit from being featured? Email us at hello@ciaooomag.com.

Facebook Conversations

Don’t Be Fooled By The Rocks That They Got

Earlier this week, power couple Jennifer Lopez and Alex Rodriguez submitted a bid to purchase the METS in partnership with JP Morgan to raise capital. Their combined net worth is reputed to be over $700 million.

Corona Discount Pricing?
Last December, the Wilpon family was in talks to sell an 80% stake to billionaire Steve Cohen but the deal fell through. The team was valued at $2.6 billion pre-Corona, BUT with the future of live sporting events as murky as a 2-day old pool of rain in the NYC subway – experts are estimating the team’s value is now a measly $1.5 billion.

From music to sports mogul
This isn’t the first time a musician owned a part of a sports team in NYC. Jay Z notoriously “bought up” the Nets back in 2004 though he only owned .067% (LESS than 1 percent) for $1 million dollars.

The future of the Mets may be unknown but hey, it’s nothing a Mets fan isn’t used to.

Facebook Conversations