New co-op food delivery service hopes to keep local restaurants in business

LoCo Tampa Bay takes smaller fees than bigger corporations
Posted at 5:21 AM, Nov 18, 2021
and last updated 2021-11-18 23:20:27-05

ST PETERSBURG, Fla. — There’s a new delivery service in Tampa Bay hoping to be a life-saving ride for restaurants. It’s called LoCo, a co-op of locally-owned restaurants, delivering food without all the fees of bigger companies.

We estimate that those big monopolies GrubHub, DoorDash, and Uber Eats are taking somewhere close to $2 million a month out of the Tampa Bay community,” LoCo Tampa Bay Owner and Manager Mike Magee said.

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LoCo’s original concept started in Iowa four years ago. Today, it’s in five cities across the country, most recently starting up in St. Petersburg.

We found a number of restaurants, independent restaurants that… felt the pressure and the pain,” Magee explained.

So far, 16 restaurants have invested capital into the co-op. Pete Boland, owner of the Galley St. Pete Tavern and Mary Margaret's Old Irish Tavern is one.

“I think the consumer and just a lot of folks, in general, don't understand that the companies like Uber Eats are taking 30% right out the restaurant's pockets,” Boland said.

While delivery services became a lifeline for restaurants during the pandemic, the rising cost of food and supplies made owners have to question every penny.

“All of a sudden it was everything from like, the avocado to the tomato to the ketchup," explained Josh Cameron, owner of Oyster Bar and Crafty Squirrel who also bought into LoCo. “When you know, the third party delivery service makes more money than the guy actually making the burger or more money than the company bringing the food, it's just a no-brainer that you know it's not sustainable.”

The reality is, Tampa Bay permanently lost hundreds of restaurants during the pandemic. According to the National Restaurant Association, the restaurant and foodservice industry sales fell $240 billion in 2020.

Most restaurants in our chamber, get about a 5-6% profit every year,” said St. Pete Area Chamber of Commerce President Christopher Steinocher. “So if you're taking 30% of that and each meal, I don't know how these restaurants make money. So did it contribute? Absolutely. Did it help them stay alive too? Certainly.”

LoCo’s model charges restaurants 17% commission (2% for customer rewards) or about $5 dollars for every $30 dollar order. Since it’s a co-op of local restaurants, the majority of those fees go right back to the community.

“In our hospitality community. We've definitely been under assault the last couple of years from a lot of different angles and this is a great way for us to stick together and also take care of our guests,” Boland said.

ABC Action News reached out to Uber Eats, DoorDash, and Grubhub with LoCo’s concerns for restaurants and drivers.

They all said delivery service is cost-intensive and their fees support things like technology and background checks on drivers.

A spokesperson for Uber Eats said in an email statement, “In response to feedback from Uber Eats restaurant partners, we began testing new ways to offer even more choice and control over the fees they pay and the services they use when working with us.”

All three companies now offer pricing plan options, something that is new for Uber and DoorDash.

For example, Uber Eats now has premium, plus and lite. Lite takes 15%, but your company only shows up on the app if a customer searches you. Premium takes 30% and you appear higher up when the app is opened.

A spokesperson for DoorDash also said in a statement, “The odds of staying open during the pandemic are eight times more likely for restaurants on DoorDash.”

Adding, “We know many of our partners have had to make changes and adapt during this time, and will continue to work alongside to support them."

Restaurant owners like Patty and Chris Conley don’t agree with the statement.

The Conley’s own Portofino Italian Ristorante near the Sunshine Skyway Bridge in St. Pete. They told ABC Action news that they’ve had bad experiences with these apps.

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“One issue that stands out in mind is when we had to deliver the food ourselves,” Patty said, explaining that the driver never picked up the food so the delivery company refunded the customer, but the food was already made.

“What else were they supposed to eat?” she asked, pointing out that many of the clientele in their area are elderly and did not leave their homes during the pandemic.

They said it’s nice to call LoCo and someone local answers the phone to answer any questions.

The Conley’s also pointed out that their delivery containers are expensive.

“It’s a lot of seafood and sauce,” Patty said.

Boland also said he budgets extra money on eco-friendly containers.

Something many customers haven’t thought about is that the cost of packaging like these containers is now doubled or more due to the supply chain back up from the ports off the coast of California to the truck driver shortage across the country.

“A hundred boxes was $45 a case like okay, that's a reasonable cost. We're being responsible for the environment and giving the guests what they want,” Boland explained. “That same case of to-go boxes went up $101.”

They say those costs haven’t been factored into the percent delivery companies take from restaurants.

A look at a Bloomberg analysis of meal delivery monthly sales for these companies shows they have been doing extremely well during the pandemic, with Uber Eats doing the best.

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“Using LoCo Tampa Bay means that the money that goes toward delivery, stays in Tampa Bay, it doesn’t go to the big corporations,” said Stan Arthur, a St Pete advocate on Facebook, who created the ‘I love St Pete’ group. He is encouraging local restaurants to think about using LoCo exclusively.

As for the drivers, the earned wage on these apps is based on an algorithm of the base pay of the time, distance, and desirability of the order and any promotions such as peak hours. Drives keep 100% of the tips in addition to that base pay.

According to Gridwise, in 2020, drivers in Tampa Bay earned a base pay median of $12.72 an hour.

St. Pete resident Nick Windhotz has been driving for Door Dash and Grubhub for three years.

“I love going to work as much as I want or as little as I need to,” he told ABC Action News. “And I love seeing the smile on customers' faces, especially the customers that can't drive, a disabled woman in the mobile home park that can't leave her house. She relies on delivery drivers.”

However, he adds that sometimes the pay doesn’t cover the gas to get there.

I’m only getting paid $2.50 and hoping the customer tips on DoorDash, so we rely on tips,” Windhotz explained.

Magee said LoCo only takes $2 dollars of every delivery fee and drivers can make about $10 a trip. That could be $25-30 an hour.

Customers are saving a few bucks too.

“I did a cost comparison on Tony's (Pizza) actually and yeah, both DoorDash and Uber Eats were $3 to $4 more up charged just for the exact same pizza compared to LoCo,” said St. Pete resident Linsey Grove who’s been using Loco for a few months now.

We've always been really supportive of co-ops,” she said. “Obviously the pandemic's been really hard in our community and we want to make sure that you know, we're not only supporting the restaurants in the area, but we're supporting drivers.”

As of right now, LoCo has about 50 restaurants onboard, delivering in a seven-mile radius of downtown St. Pete. They’re hoping to get more businesses and drivers to expand to all of Tampa Bay soon.

Click hereto learn more about signing up as a business or a driver.

You can read the full statements from these delivery apps below.

Grubhub Spokesperson:

“Grubhub supports restaurants so they can be more successful, and we will continue to work hard to earn the business of restaurants and help them through the recovery and beyond. We provide flexible pricing for our restaurant partners and commission-free tools like Grubhub Direct that allow restaurants to market directly to customers and receive their data. We don’t have a business unless restaurants have a business, and we will keep working hard to help restaurants manage costs and grow.”

Uber Eats Spokesperson:

"In late 2020, in response to feedback from Uber Eats restaurant partners, we began testing new ways to offer even more choice and control over the fees they pay and the services they use when working with us. Designed with input from thousands of restaurants across the U.S., we’re excited to make these new pricing options available nationally."

DoorDash Spokesperson:

“Our goal is to help restaurants succeed. Even before the pandemic, we focused on building services and products to help restaurants come online, reach new customers and grow their sales. When the pandemic began, we knew we had a responsibility to help restaurants during this time and worked quickly to provide relief, support and products that help them navigate through the challenges of the pandemic. As a result, the odds of staying open during the pandemic are 8x more likely for restaurants on DoorDash. Most recently we made changes to our commission structure to offer restaurants more choice and flexibility - and lower cost options - when working with DoorDash.  We know many of our partners have had to make changes and adapt during this time, and will continue to work alongside to support them."