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Montreal wants to help COVID-hit city restaurants compete with Uber Eats

·5 min read

Montreal says it wants to help build a home-grown competitor to food delivery giants like Uber Eats, SkipTheDishes and DoorDash to support struggling restaurants as they emerge from the COVID-19 pandemic.

On Friday, Luc Rabouin, mayor of the city's Plateau borough, told reporters Montreal will provide $500,000 in funding to help establish a local non-profit or co-operative that can compete with large food delivery services. The city, which has launched a request for proposals, hopes to work with existing local startups, he added.

Rabouin said Montreal's intention is to help struggling restaurants that are dealing with the high cost of delivery services, which compose up to 30 per cent of a customer's bill. Quebec introduced a temporary 20 per cent cap on delivery fees in March that applies in regions where indoor dining is banned.

“Some of these (delivery) businesses ask up to 30 per cent of the total bill to make the delivery, which deprives restaurateurs of the majority of their profits," he told reporters. "Even though the government of Quebec has intervened to limit these exorbitant fees during the pandemic ... they will remain too high after the pandemic."

Montreal isn't alone in its concern about the fees that restaurants must pay to third-party delivery apps. In December, British Columbia and Ontario temporarily capped delivery fees at 20 per cent of a customer's total order, but like Quebec, Ontario's cap only applies where indoor dining is banned.

François Meunier, vice-president of public affairs and government relations at the Association des restaurateurs du Québec, an industry group, said he welcomes the city's initiative. Restaurants, he said, expect to start paying $30 for every $100 of food they sell on third-party delivery apps once the pandemic-related restrictions are lifted.

Meunier said his organization is already working with local alternatives to third-party delivery apps that charge fixed fees — which he said is better for restaurants than fees that are based on a percentage of sales.

Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, said there have been initiatives to create lower-cost competitors to third-party delivery apps in other Canadian cities, though he said Montreal's is the first one he's heard of that is government-led.

While restaurants have to pay high fees to delivery apps, they can also raise their prices, he added.

"I'm of the mind that Uber Eats and other apps like Uber Eats allow restaurateurs to have access to a market which they otherwise wouldn't have access to," Charlebois said. "They do generate more revenues for restaurateurs."

While there may be space in the market for apps that cater to customers looking for independent restaurants, competition is already stiff, he said.

"You're up against some companies that do know what they're doing online," Charlebois said.

Mischa Young, a professor at the Université de l'Ontario français who studies urban economics, said the use of third-party delivery apps has grown during the pandemic and Canadians are unlikely to stop using them afterwards.

He said governments should help restaurants "adapt to this new reality" by supporting non-profit apps.

"It has to be led by restaurants for them to have confidence in it, for them to jump on board," Young said. "We don't need another Uber Eats out there, we need something that's restaurant-led with government support."

While capping delivery fees may benefit restaurants in the short term, when fees rise again, restaurants may have little choice but to stay on apps because that's where their customers are, Young said.

Roberto Casoli, co-founder and CEO of CHK PLZ, a Montreal-based startup that develops software for restaurants — including a delivery platform — said he thinks Montreal's idea is a good one, but it's "discouraging" that for-profit businesses may not be able to participate.

"This idea really makes a lot of sense, to be building these city-centric ordering platforms," he said. But Casoli said the city's investment may not be enough to build a new solution fast enough.

"Competing with Uber Eats, Skip and DoorDash is extremely challenging — $500,000 is a drop in the bucket," he said.

Casoli's company charges restaurants $30 a month to use its platform and then lets restaurants decide how much they want to pay for delivery — provided by separate companies — and how much of the delivery cost they want to pass on directly to customers.

Meanwhile, public health officials in Quebec's Chaudière-Appalaches region, south of Quebec City, are asking protesters who travelled on a chartered bus to Montreal last weekend to get tested for COVID-19. The protest against pandemic public health orders drew tens of thousands.

Officials said in a news release that around 48 people who travelled to Montreal in two chartered buses may have been exposed to COVID-19 during the trip.

Quebec said it vaccinated 102,762 people on Thursday, the highest single-day number since the start of its vaccine rollout. The province set another record that day, when vaccinations opened to everyone 35 and over, with 272,000 people booking vaccinations, Health Minister Christian Dubé said Friday.

Slightly more than 40 per cent of Quebec's population has received at least one dose of vaccine.

Quebec reported 919 new COVID-19 cases Friday, the fifth consecutive day health officials have reported fewer than 1,000 new cases. They also reported five more deaths attributed to the novel coronavirus.

Officials said hospitalizations dropped by six, to 574, and 139 people were in intensive care, a drop of five.

Montreal reported the most new cases with 194; followed by Montérégie, south of Montreal, with 140; and Chaudière-Appalaches with 137 cases.

This report by The Canadian Press was first published May 7, 2021.

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This story was produced with the financial assistance of the Facebook and Canadian Press News Fellowship.

Jacob Serebrin, The Canadian Press

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