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Eight months ago the owners of Ivy and Coney, a D.C. dive bar, set out to prove it’s possible to build a local, grassroots food delivery platform that can compete with the monster companies that continue to merge and monopolize the national market. DC To-GoGo, from Josh Saltzman, Chris Powers, and Adam Fry, prioritizes keeping fees low for restaurants, providing better jobs for couriers, and creating a better experience for customers.
Whether it’s high commission fees that strip restaurants of revenue, poor customer service, a $200 million fight against reclassifying drivers as employees, or adding restaurants to their platforms without permission, there’s plenty of room for improvement at DoorDash, Uber Eats, and Grubhub.
The pandemic only magnified these issues as restaurants became more dependent on third-party delivery services than ever before. Washingtonians have been doing most of their dining at home over the past 10 months as the city’s reopening process has progressed in fits and starts based on COVID-19 case rates.
Fry admits they rushed to bring the platform to fruition. He, like most, couldn’t fathom that the pandemic would still be wreaking havoc on D.C. in 2021. “We were trying to move fairly quickly to address a problem that was imminent,” he says. “Had we known it would still be happening in January, almost a year later, I would have wanted to have more of our ducks in a row.”
DC To-GoGo has been operating since May, and Fry and his partners now have a better grasp of what it takes to run a delivery platform. They’ve been listening to feedback from stakeholders and making adjustments along the way. As others potentially look to launch their own delivery services across the country as an alternative to the sometimes predatory major players, City Paper debriefed with Fry and Saltzman. Just how hard is it to get something off the ground and what’s the pay off?
The Technology Learning Curve
“As recently as March we were a couple of bar owners with a meat business,” Saltzman says, referring to Epic Curing. “Now we’re a tech firm. We’ve made plenty of mistakes, but we’ve learned a ton.”
From the jump, the DC To-GoGo founders looked at off-the-shelf software, but struggled to find an option that was robust enough to meet all of their needs. They settled on a mix of products to hold them over until they finish building their own platform from scratch. It takes a lot of research to wear the hat of a web developer. “We’ve come to a place where we have a really good launchpad now,” Saltzman says.
But DC To-GoGo can’t have all of the bells and whistles restaurants have come to expect. “We have businesses that see features on Uber and Grubhub who say, ‘Why don’t you have this?’” Saltzman continues. “I’m like, we don’t have $1,000. We have $1. We’re trying to figure out how to build something new, not try to replicate what the big guys do.”
They’ve incorporated functions that “reduce friction,” like time-slot ordering to prevent restaurants from becoming overwhelmed with orders. “When you have a restaurant with five tables, you don’t take reservations for 10 tables at 7 p.m.,” Saltzman explains. “Why would you do the same thing with your online marketplace? Customers don’t get a good product and you can’t make food fast enough.” Being able to pause orders, the thinking goes, reduces stress.
“Every restaurateur is different,” Saltzman continues. “Each one has 50 requests. We’ll try to get to that, but we have 50 others chirping in our ears. We’re trying to set up a Google group where restaurant owners can talk about anything related to their business and share ideas.”
Building a Workforce
Those who deliver food for companies like DoorDash are part of the gig economy. They’re classified as independent contractors. While they have the freedom to set their own work schedule, they’re not privy to employment benefits and labor protections like guaranteed minimum wage. DC To-GoGo is trying another approach.
“Our model is working on transparency and living wages,” Fry says. “All of our couriers work for us and have fixed hours. We’re trying to make it so delivery people aren’t just being stepped on nonstop.” He hopes his employees “can find growth potential and career potential” if that’s what they’re seeking.
While DC To-GoGo couriers don’t have benefits like health insurance yet, Fry says they’re paid at least $18 an hour. That’s three bucks above the minimum wage in the District. Being a delivery driver is a difficult, and sometimes dangerous job. Long waits at restaurants and late arrivals at residences are often beyond drivers’ control but can cost them money at the end of the day. Consistent wages can potentially offset mishaps.
The drivers they currently employ, according to Saltzman, are eager for more hours. DC To-GoGo has expanded slowly and deliberately one neighborhood at a time starting with Shaw. “That allows us to control the level of service we can provide,” Fry says. “If we said we’re launching throughout all of D.C., we would relinquish all control over the quality of the product. There’s too much money behind big players, we can’t win on [reach]. Where we can win is service.”
The team hopes to beef up employee hours and hire more Washingtonians as they spread their wings. They just brought some Capitol Hill restaurants online this month. “As someone who lives in Trinidad, it’s a personal goal to expand to and past the Anacostia River in Wards 7 and 8,” Fry says.
Changing Customer Behavior
Most DC To-GoGo customers are satisfied, according to the co-founders, but they have requests that aren’t too surprising. Having grown accustomed to scrolling through a virtual smörgåsbord of options on the large, third-party delivery apps, they want to see more restaurants in more neighborhoods represented as well as larger delivery radii. “We can’t quite afford to hire enough people yet,” Fry says. “If we had that multi-billion evaluation that DoorDash received, sure we’d cover the whole city next month.”
Onboarding new spots doesn’t happen overnight. “It takes time to build menus, train restaurants, set them up, and hire more drivers,” Saltzman adds. “We try to add as many restaurants as possible, but we don’t want to force them to join.”
Some companies add restaurants without their permission, which can cause a great deal of confusion and frustration. They try to hook owners on the extra income and seemingly free marketing so when the companies come calling to make the partnership official, they’ll agree to pay commission fees.
That’s not a game DC To-GoGo wants to play, so they’re hoping customers will be patient while they scale up and will choose them over their competitors because of their earnest attempt to do business responsibly and provide a better experience.
“People have come to expect, because of Amazon and Grubhub, that everything will be at their door in 20 minutes,” Saltzman says. “It’s a lie we’ve been sold.” He says he was sick of delivery apps telling him his food would be there in 30 minutes only to have it arrive cold after an hour. Shrinking delivery radii is DC To-GoGo’s strategy to combat this.
“We had a customer email us to complain that they couldn’t order from a restaurant a couple of days ago,” Saltzman recounts. They were outside the restaurant’s delivery radius. “You’re two miles away and, for a lot of restaurants, the food doesn’t travel well. Could we have sent a driver there? Yes. But you would have received mush food that had been steaming in a takeout container. We all need to consider what we’re trying to do and the end goal. You have to support the places immediately around you.”
Making The Low Fees Work
Typically, third-party delivery companies charge 30 percent commission fees for their full suite of services. During the pandemic, jurisdictions across the country, including D.C., put fee caps in place to keep more money in the pockets of desperate restaurants. The fee cap here is 15 percent and will remain in place through the duration of the city’s public health emergency. DoorDash, Postmates, and other companies have fought these caps every step of the way and have tried to find ways around them.
DC To-GoGo has three tiers of membership. Fees max out at 15 percent by design. The first is for establishments that only want to offer pick-up. DC To-GoGo provides an online payment portal and the ability to schedule pick-ups, and takes 5 percent per transaction. The second gives restaurants access to DC To-GoGo technology, but allows them to hire their own drivers. DC To-GoGo takes 10 percent per transaction at this level. The full-service membership where restaurants gain access to DC To-GoGo’s fleet of delivery drivers comes with a 15 percent fee.
“When the cap goes away, our model remains the same,” Fry says. “We’re trying to approach this symbiotically. If it doesn’t work for restaurants, it’s not going to work.”
But are such low fees compatible with running a sustainable delivery business? The co-founders self-financed DC To-GoGo and got a boost in the form of two grants—one from Shaw Main Streets and another from the Office of the Deputy Mayor for Planning and Economic Development. They’re not turning a profit yet. “We’d be happy if it was profit-neutral,” Saltzman says. “We’re getting there … But if you’re getting into this for the money, you’re insane.”
The pandemic only accelerated the growing demand for delivery locally and nationwide. It’s here to stay. The question is whether grassroots competitors can crack the code of how to stay in the black. Even the mammoth platforms lose money. “Everybody should be working to keep more money in their local economy,” Saltzman says.