Toast clarifies its newest white-label delivery deal
Uber Direct is now one of two options for restaurants. You can guess the other.
Point of sale and payments provider Toast just announced a new integration with Uber Direct, Uber’s white-label delivery service. The deal adds Uber as a delivery provider for restaurants that use Toast Delivery Services to accept digital orders for delivery. Diners place orders on a restaurant’s website or Toast-powered mobile app, and a logistics provider like Uber delivers the food to their door.
It’s a simple enough arrangement for the restaurants that use it, and that’s the point. Toast touts its online ordering capability as a way for restaurants to maintain direct relationships with digital customers. Deliveries are offered for a flat, per-delivery fee that restaurants often pass on to the diner. And Toast’s software does the heavy lifting, connecting restaurant to courier to diner.
This deal might surprise some restaurants who heard a different story in October.
Then, according to operators who received the message, Toast notified restaurants using Toast Delivery Services that Uber would replace DoorDash as their delivery provider in late October. A now-deleted FAQ page on Toast’s customer support site said the company switched to Uber Direct “to provide your restaurant with an on-demand delivery solution at a lower cost to your restaurant.”
The messaging sparked understandable confusion among operators.
“The announcement was not made clearly,” a restaurant owner in the Midwest, who learned of the planned switch from a pop-up message inside their Toast account, told me. “But then [the delivery service] didn’t change when they said it would.”
“They have been very quiet about it,” another Toast customer posted in a Reddit forum a month ago.
A representative for Toast declined to answer questions about the company’s reported October message to restaurants, but did address its new delivery pricing. Toast’s base price for a standard delivery — regardless of delivery provider—1 is $6.99 per delivery, 50 cents lower than it was before, they said.
A DoorDash rep confirmed that restaurants that currently use DoorDash Drive On-Demand through Toast Delivery Services can keep using it. New restaurants will have the option to choose between DoorDash and Uber.
Finally, in a pair of statements, execs at Uber and Toast said they’re excited about the expanded partnership between the companies. But they offered little detail about the deal’s substance, speaking instead in familiar platitudes about helping restaurants maximize margins and reach more diners.
Regardless, the time is right for this deal.
Lately, Uber’s been hyping its Uber Direct offering. It’s one of the fastest-growing parts of Uber’s business, according to CEO Dara Khosrowshahi. During the company’s third-quarter earnings call, he promised to “invest aggressively” in the service, telling investors the company would hire more engineers to support Uber Direct’s current clients and future growth. This focused push into more restaurants is clearly part of the effort.
In September, Olive Garden announced it partnered with Uber Direct to deliver orders placed on its website. It was a big win for Uber, considering the chain had long resisted offering its food for delivery with a third party.
DoorDash is still going after big restaurant deals, too. In November, the company announced it would power Starbucks delivery for orders placed inside the popular Starbucks app.
We’ve entered a new phase in the so-called delivery wars as the country’s two largest services jockey for the best business development deals with enterprise brands and technology companies.
But for restaurants?
“I don’t care who’s picking up my orders,” one California operator told me, “as long as they’re delivered on time.”
This post has been corrected to more accurately reflect Toast Delivery Service pricing for restaurants. More details in the footnotes. We regret the error.
What else?
Grubhub founder Matt Maloney says he tried to buy the company back from Just Eat Takeaway — twice — for over $1 billion. It didn’t work out; Grubhub was instead sold to Wonder for $650 million in a deal that should close early next year. “After the second attempt I was told that [JET chief executive] Jitse [Groen] was not interested in selling the company back to me so I stopped trying and no one reached out to me or my financial partners around the time of this deal to inquire if we would beat this offer,” Maloney told the Financial Times last month. — Financial Times
I enjoyed this well-informed prediction of what might happen to restaurant tips in New York under the billionaire-friendly Trump administration. It’s a perspective I missed in my own (long) list of predictions for business under the next American president. — Grubstreet
In Spain, delivery drivers are becoming employees at Glovo, a third-party delivery app. Shares in parent company Delivery Hero were down almost 10 percent after the company said the move would cost €100 million. — Reuters
Elsewhere in Europe, Just Eat Takeaway is delisting from the London Stock Exchange. It’s an effort to “reduce the administrative burden, complexity and costs associated with the disclosure and regulatory requirements of maintaining the LSE listing, and in the context of low liquidity and trading volumes.” The stock will de-list in London on December 27, but will remain listed in Amsterdam. — CNBC
After publication, a Toast representative clarified the new $6.99 base price applies to only one delivery provider. They didn’t say which one.
In the interest of transparency, here are more pricing details than I ever planned to include: Per Toast’s recently updated help pages, Uber’s base price is $6.99 and covers deliveries of up to 6 miles. This distance is calculated “as the crow flies,” or the straight-line distance between a restaurant and delivery recipient. Deliveries between 6 and 8 miles cost an additional $1.75, for a total of $8.74. Deliveries between 8 and 10 miles incur an additional $3.25 fee for a total of $10.24. DoorDash’s base price is $7.49 for deliveries of up to 5 miles. Distance on DoorDash is calculated as driving distance between restaurant and diner. The delivery fee increases by 50 cents for each additional mile up to 10 miles. Whew.