When the coronavirus outbreak started over a year ago, many cities were quick to shut down indoor dining, limiting restaurants to takeout and delivery options only. Since then, eateries have largely been given the green light to open to customers, albeit at reduced capacity. But between having to limit in-person dining and the fact that many people are more comfortable ordering food to their homes than dining in a shared, maskless space, restaurants these days are relying heavily on takeout and delivery to maintain a solid revenue stream. But they're facing one big challenge related to it -- disputed charges that are hurting their bottom line.
Customer complaints are hurting restaurants -- and many aren't legitimate
Now that restaurants are doing so much takeout and delivery business, customers are in a better position to take advantage and engage in fraud. The result? Restaurants are getting hammered.
Between fraudulent complaints of missing orders, missing items, or incorrect items, restaurants are losing money on delivery and takeout -- and they're also fighting a losing battle. When a customer claims a delivery order never made it and disputes a charge on a credit card, the restaurant that sent that order may have a hard time proving otherwise. After all, restaurants pump out food at such an intense volume that they can't exactly pause to document each order with photographs before packing it up into takeout cartons or sending it off with a delivery driver.
Now restaurants that use delivery apps like DoorDash (NYSE: DASH) do have some protection in these situations. DoorDash, for example, has a feature that allows restaurants to verify once an order has been retrieved, so there's some built-in peace of mind there. But delivery apps like DoorDash also charge exorbitant fees that many restaurants can't afford, so some revert to local delivery services or even in-staff delivery. Those options may be more affordable, but they don't offer the same assurance.
Furthermore, when disputes for deliveries made through apps like DoorDash do arise, they can take multiple days to resolve, and it's restaurants that are often left waiting for days for their accounts to be credited.
Bad news for real estate investors
For the past year, countless restaurants have struggled just to stay afloat. The fact they're being harmed by dishonest, fraudulent behavior only puts them in an even more precarious position at a time when any revenue loss can be significant.
If restaurants are forced to shutter as a result of losing too much revenue to overcome, commercial landlords will be left with vacancies on their hands. That's not a good thing at a time when so many businesses are closing their doors. Losing restaurants can also impact local property values, and that's the sort of pain real estate investors might feel across the board.
Unfortunately, there's not a great solution to the problem at hand. Until restaurants can welcome diners at full capacity, they're apt to remain reliant on takeout and delivery to keep their doors open -- even if that means dealing with losses in the process.