Yahoo Finance ChowNow sticks to zero commission orders as 'hits keep coming' for restaurants
The battered restaurant industry, which has relied heavily on takeout and delivery in the pandemic era but grappled with high costs associated with service providers, has a friend in ChowNow.
The online ordering platform prides itself on "strengthening the relationship with the restaurant and the diner themselves" by not getting in the way — and not taking any commission fees like other platforms, including UberEats (UBER), DoorDash (DASH) and Grubhub (GRUB).
"We don't take a cut, actually, at all. We just make money off that monthly fee," ChowNow CEO Chris Webb told Yahoo Finance. In recent weeks, the platform has seen daily order volume spike 20% as the Omicron variant of COVID-19 swamps the country.
Unlike other apps, ChowNow handles mostly food orders but not delivery. To date, ChowNow processed more than 160 million online orders, mostly takeout. However, if it is delivery, the restaurants typically fulfill the order.
The three core products ChowNow offers restaurants includes Direct, a subscription suite; Marketplace, an app or web equivalent of a DoorDash or Grubhub; and Order Better Network, to set up a storefront on platforms like Yelp, OpenTable and Google.
The company's "very basic and easy-to-understand business model" charges restaurants a flat monthly fee to access its software. Webb emphasized the company has been "very anti-commission" since its inception.
He added ChowNow is "trying to lead the way there" and believes in transparent pricing. "Unfortunately, not everyone believes, but something that is one of our key principles. Always has been, and always will be."
'The hits keep coming'
For this reason, ChowNow was able to avoid any government regulations that aimed to crack down on major food delivery companies.
In late August, the New York City Council introduced a bill that would prohibit third-party food delivery services from charging food service establishments more than 15% per order for delivery, and more than 5% per order for all other fees, except for transaction costs.
As the Omicron variant takes a toll on the restaurant industry at large and reservations see a sharp decline, Webb told Yahoo Finance "the hits keep coming." Yet very few of the restaurants on the app have gone under in the past year and half due to the ability to be "nimble" and "make adjustments."
In the beginning of the COVID-19 pandemic, restaurants "signed up for every service possible at the time because they didn't really have a choice," Webb said. With owners facing yet another round of challenges, he believes they are beginning to stick with platforms that allow them to keep profits, and insure that they will not access customer data.
"A lot of restaurants have kind of dropped various services that charge huge commissions, and they realize, why am I paying 20%, 30%, 40% commissions?"Webb asked.
Since its inception in 2011, the company has 20,000 local restaurants on its app, over 20 million active diners and processed more than $2 billion dollars in orders. Due to the zero commission, the company says it has saved $470 million for restaurants.
And recently, the company launched 'Diner Impact Score' for customers to keep track of how much money they saved restaurants by ordering on the platform.
"I think everyone's kind of forgotten that restaurants, for decades, have been delivering food, and that's still very much the case today."
If the restaurant does not have the ability or staffing to deliver the food, ChowNow partnered with both regional and local delivery companies around the country to fulfill the order.
And Webb emphasized the company is "100% transparent around the fees...we don't try to bury fees into the service fees or by raising menu prices. When you go to place the delivery order, you will see that fee. You'll see exactly what it costs and you'll know exactly what the restaurant is paying there and exactly what the customer has to pay."
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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