Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

This story was produced in collaboration with the Food & Environment Reporting Network.

When Grubhub came to Iowa City in 2017, Jon Sewell got what he describes as a “call to action.” He owns a D.P. Dough franchise there and had been using a delivery service called OrderUp to get his calzones to college students. But then Grubhub bought out OrderUp and doubled the commission on orders to an astronomical 30 percent, plus fees. At those rates, Sewell says, he lost money on every order.

So in January 2018, Sewell joined forces with about 25 Iowa City restaurant owners who chipped in to launch their own delivery co-op called Chomp. The business, which now employs five to seven people full time and about 100 independent drivers, caps commissions below 20 percent, redistributes profits to the co-op members, and offers local customer service, which Grubhub had outsourced.

Sewell’s local experiment has national implications. At the start of the pandemic, food delivery apps, including the “Big 3”—Grubhub, Uber Eats, and DoorDash—were hailed as saviors, facilitating a takeout boom meant to keep restaurants and their staffs working. But eateries were quickly confronted by a harsh reality: These Silicon Valley and Wall Street–backed firms, which together dominate 93 percent of the market share nationwide, are designed to scrape money out of local businesses—sucking up a combined $9.5 billion in revenues in 2020 alone—and send it to shareholders.

Jon Sewell of Chomp

Adria Carpenter

“The majority of consumers really want to support locally owned restaurants,” says Kennedy Smith, a senior researcher at the nonprofit Institute for Local Self-Reliance (ILSR). “They think that by ordering food through the big delivery apps, they’re supporting them. It’s actually not, and that’s a real disconnect.”

Brian Rorris, who owns five restaurants and two bars in Iowa, calls the big apps “leeches.” He helped found Chomp, and argues that the delivery co-op, with its lower commission rate and local customer service, is “more beneficial to the market.” Iowa City seems to reflect as much: Chomp now works with nearly 200 local joints. Sewell has helped start a similarly successful delivery co-op, Nosh, in Fort Collins, Colorado, and followed it up with LoCo Co-ops, an unaffiliated company that has launched five more enterprises across the country and is now organizing in Chicago.

Should Big Tech’s apps be worried about a large-scale restaurant revolt? A September 2021 McKinsey report detailed a recent shakeout in third-party food delivery companies, as Uber bought Postmates and Grubhub was purchased by Just Eat Takeaway. The report hinted that the apps’ current business model sits on a shaky foundation, reminding investors that while they may have experienced “explosive growth” during the pandemic, “delivery platforms, with few exceptions, have remained unprofitable,” and that the apps’ high commissions were “unsustainable” for both restaurants and the apps in the long term.

In the meantime, local delivery services are on the rise. A recent report from ILSR looked at 20 startups offering local delivery services and found that they could disrupt the big apps by offering lower commissions to restaurants, better pay for delivery personnel, and better hospitality.

Startups aren’t the only threat. During the pandemic, New York City, San Francisco, and other cities passed ordinances capping third-party delivery fees at rates ranging from 10 to 20 percent, which the companies are challenging in court as unconstitutional. Many cities used pandemic relief funds to pay for free local delivery, partnering with taxi companies and bike messenger apps.

John Schall, a restaurant owner and former economics professor at Yale, cautions against excessive optimism. “I’m skeptical that co-op or other small-scale delivery options will ever make a significant difference,” he says. “If they are successful, they will get bought up. Everyone will have a price and the Big 3 will pay it.”

Meanwhile, the fate of independent restaurants may depend on whether they can stave off delivery monopolies. “I believe the biggest threat to restaurants is the one they’re least aware of,” Sewell says: that the Big 3 could harvest local ordering data to form delivery-only fulfillment kitchens known as “ghost kitchens.” Amazon does this on a mega scale, marketing copycat products directly to customers, thus undercutting their own marketplace clients. In 2019, DoorDash launched a ghost kitchen operation in the Bay Area. That concept has since expanded to other cities.

“I have nothing positive to say about Silicon Valley and what tech has done to our society,” Sewell says. Local delivery co-ops are “my way of fighting back.”

Update: A DoorDash spokesperson reached out after this story was published to assert that the company’s DoorDash Kitchens Full Service model was a way for restaurants “to expand their business, whether they are looking to outsource demand to an off premises location, or test a new geography.”

Correction: An earlier version of this story misstated Chomp’s commission cap. The co-op caps commissions below 20 percent.

WE'LL BE BLUNT

It is astonishingly hard keeping a newsroom afloat these days, and we need to raise $253,000 in online donations quickly, by October 7.

The short of it: Last year, we had to cut $1 million from our budget so we could have any chance of breaking even by the time our fiscal year ended in June. And despite a huge rally from so many of you leading up to the deadline, we still came up a bit short on the whole. We can’t let that happen again. We have no wiggle room to begin with, and now we have a hole to dig out of.

Readers also told us to just give it to you straight when we need to ask for your support, and seeing how matter-of-factly explaining our inner workings, our challenges and finances, can bring more of you in has been a real silver lining. So our online membership lead, Brian, lays it all out for you in his personal, insider account (that literally puts his skin in the game!) of how urgent things are right now.

The upshot: Being able to rally $253,000 in donations over these next few weeks is vitally important simply because it is the number that keeps us right on track, helping make sure we don't end up with a bigger gap than can be filled again, helping us avoid any significant (and knowable) cash-flow crunches for now. We used to be more nonchalant about coming up short this time of year, thinking we can make it by the time June rolls around. Not anymore.

Because the in-depth journalism on underreported beats and unique perspectives on the daily news you turn to Mother Jones for is only possible because readers fund us. Corporations and powerful people with deep pockets will never sustain the type of journalism we exist to do. The only investors who won’t let independent, investigative journalism down are the people who actually care about its future—you.

And we need readers to show up for us big time—again.

Getting just 10 percent of the people who care enough about our work to be reading this blurb to part with a few bucks would be utterly transformative for us, and that's very much what we need to keep charging hard in this financially uncertain, high-stakes year.

If you can right now, please support the journalism you get from Mother Jones with a donation at whatever amount works for you. And please do it now, before you move on to whatever you're about to do next and think maybe you'll get to it later, because every gift matters and we really need to see a strong response if we're going to raise the $253,000 we need in less than three weeks.

payment methods

WE'LL BE BLUNT

It is astonishingly hard keeping a newsroom afloat these days, and we need to raise $253,000 in online donations quickly, by October 7.

The short of it: Last year, we had to cut $1 million from our budget so we could have any chance of breaking even by the time our fiscal year ended in June. And despite a huge rally from so many of you leading up to the deadline, we still came up a bit short on the whole. We can’t let that happen again. We have no wiggle room to begin with, and now we have a hole to dig out of.

Readers also told us to just give it to you straight when we need to ask for your support, and seeing how matter-of-factly explaining our inner workings, our challenges and finances, can bring more of you in has been a real silver lining. So our online membership lead, Brian, lays it all out for you in his personal, insider account (that literally puts his skin in the game!) of how urgent things are right now.

The upshot: Being able to rally $253,000 in donations over these next few weeks is vitally important simply because it is the number that keeps us right on track, helping make sure we don't end up with a bigger gap than can be filled again, helping us avoid any significant (and knowable) cash-flow crunches for now. We used to be more nonchalant about coming up short this time of year, thinking we can make it by the time June rolls around. Not anymore.

Because the in-depth journalism on underreported beats and unique perspectives on the daily news you turn to Mother Jones for is only possible because readers fund us. Corporations and powerful people with deep pockets will never sustain the type of journalism we exist to do. The only investors who won’t let independent, investigative journalism down are the people who actually care about its future—you.

And we need readers to show up for us big time—again.

Getting just 10 percent of the people who care enough about our work to be reading this blurb to part with a few bucks would be utterly transformative for us, and that's very much what we need to keep charging hard in this financially uncertain, high-stakes year.

If you can right now, please support the journalism you get from Mother Jones with a donation at whatever amount works for you. And please do it now, before you move on to whatever you're about to do next and think maybe you'll get to it later, because every gift matters and we really need to see a strong response if we're going to raise the $253,000 we need in less than three weeks.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate