Unhappy Chick-fil-A customers have filed a class action lawsuit against the chain, claiming that the food chain’s vow of only charging customers a flat, low-priced delivery charge is an empty promise.
The plaintiffs claim that Chick-fil-A “deceives consumers into making online food purchases they otherwise would not make” and “gains an unfair upper hand on competitors that fairly disclose their true delivery charges.”
The complaint tries to make the point that Chick-fil-A promised its customers low-price delivery -- usually $2.99 or $3.99. But they say that promise was only made to make Chick-Fil-A delivery appealing for consumers in a crowded food delivery marketplace. The group claims the chain’s food prices on its website and app are 25% to 30% higher than in-store prices -- adding $1.10 to, say, a chicken sandwich for delivery.
That markup makes "Chick-fil-A's promise of a low-cost delivery patently false,” the lawsuit alleges. “In fact, Chick-fil-A imposes hidden delivery charges on its customers in addition to the low ‘Delivery Fee’ represented in its app and on its website.”
To its credit, Chick-Fil-A does note that its menu prices for delivery are higher than at restaurants and that “additional fees may apply.” However, that clarification is an asterisk in small type at the bottom of the ordering webpage.
Chick-Fil-A is not alone in delivery price markup
In a market study conducted by Gordon Haskett Research Advisors, researchers found that Chick-fil-A isn’t the only food chain marking up the price of its food when consumers go the delivery route. Starbucks, Chipotle, McDonald's, and others keep it hush, but list menu prices are 15.3% higher on average for delivery orders compared to pick-up orders, according to the Haskett analysis.
Who’s the worst? Chick-fil-A indeed had the highest delivery pricing premium of the 25 chains analyzed by Gordon Haskett, with menu prices that are 29.8% higher for delivery compared to pick-up. At Starbucks, delivery menu prices are 20.3% higher than pick-up; they were 19.6% higher at McDonald's.
Restaurants say they’re just trying to stay afloat
The whole restaurant delivery situation is becoming complex. When the pandemic set in, consumers fell in love with food delivery mostly because of convenience and safety. At that point, third-party companies like DoorDash, GrubHub, and UberEats came to the rescue.
That was good for everyone at first; but as restaurants saw how much delivery services were eating into their profits, chains had little choice but to try to make up that lost revenue.
Laying things out from a consumer’s perspective, the Haskett team broke down just how much a restaurant chain is likely to earn from a pick-up order versus a delivery order. In laying out a real-life example, analyst Jeff Farmer ran the numbers on a $20 Chipotle order using a delivery commission of 15%.
Farmer estimated that once you take the cost of food, labor, and other variables out of the equation, Chipotle’s net profit on a $20 in-store or pick-up order is $4.10. If you subtract a 15% delivery fee, Chipotle ekes out just $1.10 on a $20 order. Farmer notes that if Chipotle used a delivery provider that charged a $6 commission — which is in the 30% range typical of Grubhub or UberEats — it would actually lose $1.90 on a $20 order.
For a Chipotle delivery order to net the restaurant as much money as a pick-up order would, Chipotle would have to raise menu prices by 15%, according to Gordon Haskett's model. That would mean a $9 burrito would cost $10.35 on the delivery menu.