“We can’t ever predict that some little bug is going to show up and take over the world, shut everything down, and food delivery is going to blow up especially right after you started a food delivery company,” Nicki Bartolone says.
But that’s exactly what happened to Nosh Northern Colorado, where Bartolone is the operations manager. The regional third-party delivery service grew their revenue 520% from the start of the COVID-19 pandemic to the beginning of 2021.
Nosh is a regional delivery company, managed and partially-owned by local restaurants, that serves Fort Collins, Windsor, and Greeley.
In a crisis that was uniquely devastating to many small businesses, Nosh not only thrived but served as an economic buoy for local restaurants who were rendered dependent on delivery to get food to their customers’ plates.
“Once people sort of started to realize this wasn’t something that was going to go away in the short term, that’s when we really saw sales drive up,” Bartolone says.
Nosh, of course, was not alone in catching the new wave of delivery demand. National delivery apps like DoorDash and GrubHub saw their revenue soar in 2020 after years of being outpaced by their costs. The first half of the pandemic brought the top four companies an extra $3 billion compared to the same period from previous years.
But that’s not good news for restaurants. The pandemic has only tightened the tense dynamics between smaller restaurants and the big delivery companies, and the difference with Nosh is that it’s a local delivery company created by restaurateurs angling to get people off those large corporate apps.
A group of restaurant owners in Northern Colorado launched Nosh in 2019 in response to the exorbitant fees charged by the likes of GrubHub and UberEats.
The idea was brought to Fort Collins by the creators of Chomp, a locally-owned delivery company based in Iowa City. Chomp began in 2017 after GrubHub acquired a slate of smaller delivery markets — including the one in Iowa City — and soon after, surged their restaurant and delivery fees.
For an industry with notoriously low profit margins, the average 30% service fees that third-party delivery apps charge oftentimes cause restaurants to lose money on each order, Bartolone says. And that was before COVID hit.
Nosh on the other hand, charged rates of 15% for restaurants exclusively on Nosh and 20% for nonexclusive before the pandemic, averaging 17% overall. Bartolone said the members felt that was a sufficient operating price that was still a lower rate: an important balance to strike considering the company’s board is composed of exclusively restaurant owners and has over 40 local restaurants invested.
“We were with OrderUp prior [to Nosh] and the amount of fees that we were paying was ridiculous,” says Lisa Paugh, owner of Walrus Ice Cream in Fort Collins.
Paugh was one of Nosh’s initial investors, a decision she says was a “no brainer” given her store’s commitment to staying local. She says she’s proud of Nosh’s operations for keeping money locally invested. For both customers and restaurant owners, Nosh has been far more transparent than other services, Paugh says.
During the pandemic, some of the national apps reduced their restaurant fees to varying degrees. Those changes have appeared unlikely to last long-term though, considering many cities, including Denver, have had to pass their own fee caps on these services.
“These big companies are trying to come in as the heroes and lower their commissions and try to ‘save the restaurants’ but it’s just kind of a tactic — or at least that’s my opinion,” Bartolone says.
“These big companies are trying to come in as the heroes and lower their commissions and try to ‘save the restaurants’ but it’s just kind of a tactic — or at least that’s my opinion.”— Nicki Bartolone, Nosh operations manager
Meanwhile at Nosh, fees were further flattened when they landed a partnership with the City of Fort Collins. Using over $152,000 of CARES Act funding, Fort Collins paid the full sales commission for restaurants on Nosh for roughly the last month of 2020, according to Josh Birks, city economic health director.
“What we were really trying to do in that 37 days that we provided the full subsidy was try to change consumer behavior from DoorDash/GrubHub to NoCo Nosh in order to create long-term savings for the restaurants,” Birks said.
And the results look promising. Two-thirds of restaurants who were on multiple delivery platforms saw a shift in sales toward greater customer use of Nosh, according to the city’s post-program survey. Plus, most responding restaurants received increases in business. From late November to late December, Nosh saw its largest addition of new customers and highest volume of total orders for all of 2020.
The city partnership also ensured that Nosh would charge all restaurants no sign-up fee during the initial subsidy period and a flat 15% commission rate to all restaurants until all pandemic dining restrictions were lifted or until the end of 2021 (whichever comes first).
Fort Collins officials preferred this contractual partnership over Denver’s regulatory fee-cap approach, according to Birks. It’s worth noting that all delivery services were invited to compete for the program but none of the larger names submitted in the bidding process. The same thing happened in Boulder when they launched a similar restaurant delivery program.
In the first two months of the Fort Collins program, NoCo Nosh added another 32 restaurants, bringing their total listings to over 330 in the region. Windsor launched a similar partnership in February 2021 to cover Nosh restaurant commissions.
Even if the volume of orders is not so high again this year, Nosh still offered an important rallying point for local eateries. Bartolone says owners who typically compete against each other “united as a whole” to keep each other open. That attitude trickled into the local community who turned out in greater customer support for local businesses.
In the case of Paugh and Walrus Ice Cream, Nosh has retained an important networking role for local restaurateurs. Though Walrus relies more on foot traffic than deliveries — and has consequently taken a 30% hit to their sales in the last year — during the pandemic, other Nosh businesses like Wing Shack began carrying pints of the locally churned ice cream.
“I’m very blessed by that because there’s no one that understands what we do more than each other,” Paugh says.
While the delivery sales boost of 2020 is unsure to last post-pandemic, Nosh remains optimistic about the growth they have made.
“I don’t know what would have happened if this pandemic hadn’t happened,” Bartolone says. “We were growing at a great rate prior to it, but would we have these numbers that we have now? I don’t know. It’s very interesting to think about.”
Though Colorado is jostling to return to pre-pandemic operations, cases like Walrus still show how the apparent rebound in U.S. consumer spending doesn’t tell the whole story.
Between increased deliveries and loosening coronavirus restrictions, restaurant spending appears back to pre-pandemic levels in Fort Collins, Birks says. But that doesn’t account for the shift in consumer preferences, like ordering the classic pizza delivery over the sit-in steak dinner.
“It’s this kind of tale of two restaurants,” Birks says. “This is the way the system in America works: we spend money … third party delivery companies and restaurants have figured out how to get our money and provide us food. But, it’s definitely very different for the kind of restaurants that are being patronized by individuals.”
And so, for the industry fully upended by COVID-19, true normal may remain out of reach for a while longer yet.
Author’s Note: This story was written for my 2021 senior showcase project.