One of Winnipeg's most well-known local restaurant chains has severed its ties with Skip the Dishes, saying the benefits of using the online delivery company turned into drawbacks.

Stella's Cafe and Bakery was one of the first restaurants to sign on with Skip the Dishes more than five years ago.

Since then, the Winnipeg-based firm has grown to dominate the third-party home-delivery market, filling millions of orders a month across the country.

Grant Anderson, vice-president of Stella's, says using Skip drastically changed the way the restaurants operated and ultimately wasn't a good fit.

Grant Anderson, the vice-president of Stella's Cafe and Bakery, says losing touch with customers was a major factor in severing ties with Skip the Dishes. (Lyza Sale/CBC)

"Our guests were becoming their customers," said Anderson. "Which meant that we were losing connection with a large part of our base. And the same people that we would see on a regular basis were now opting to choose for getting Stella's at home."

Anderson said having a direct connection to customers is a huge part of its restaurants' charm and he believes it's part of what makes them a Winnipeg staple, with eight locations in the city.

"When you're in the service industry, connection to your base, connection to that guest that's spending money in your restaurant and choosing Stella's, is a very important connection to have."

But it wasn't just the customer experience that was affected, according to Anderson. He says the service was ultimately not profitable for the restaurant.

When Stella's joined Skip, Anderson said they were paying 11.2 per cent of each order placed directly to the company. He said he considered that to be a very generous arrangement.

But that number quickly grew, he said. By the end of the five-year partnership, Anderson said Stella's was paying between 25 and 30 per cent for every order — an amount that he said was "crippling."

"The more business you were doing with [Skip], the more representation they would have as a percentage of your sales, the more potential for loss there actually was," he said.

After starting with about $150,000 in Skip the Dishes-related sales in the first year of their deal, Anderson said Stella's was on target for somewhere between $1.8 million and $2 million in orders in the final year.

Penalties for late orders

In addition to the percentage on each order, Anderson said there were ancillary costs associated with using the service.

The restaurant has to set an estimated preparation time for each order, according to Anderson. This way, Skip can send a driver to arrive right as the food is ready to head out the door. If they don't meet that estimated time exactly, the restaurant is charged a punitive amount for every minute that the driver has to wait.

Because of this, he said they found themselves having to prioritize Skip the Dishes orders and in a lot of cases, it was to the detriment of guests in the dining room.

Grant Anderson explains why Stella's cuts ties with Skip the Dishes:

Dishes, saying the benefits of using the online delivery company turned into drawbacks. 0:57

Anderson said Stella's was also financially responsible for the driver not meeting delivery times and for any problems that may have arisen throughout the process.

"If an order needs to be remade because a driver was late in getting there, well it's our reputation that's actually on the line," Anderson said. "So if the driver was 15 minutes late and the food has been waiting, it's in our own best interest to actually re-prepare that food. There's no compensation on that end."

A spokesperson for Skip the Dishes refused to confirm any details about the costs associated with using the service.

I think it's important for people to realize that there's a vibrancy and excitement that's brought by restaurants, especially in city centres, that can't be recreated with take-away counters. - Stella's vice-president Grant Anderson

Anderson said that beyond dollars and cents, he's also concerned about the ways these delivery companies are changing how restaurants compete with each other.

Skip the Dishes currently partners with 12,000 restaurants across the country -- 600 of which are in Manitoba. That's according to Toby McCrae, the Media & Public Relations Manager for Skip. She said they're filling millions of orders a month.

For Stella's, the sheer number of restaurants available on the app changed how they saw themselves in the city.

Stella's Cafe and Bakery was one of the first restaurants to sign on with Skip the Dishes more than five years ago. (Travis Golby/CBC)

"Years ago, a restaurant on the corner of the block was competing with everyone within a certain radius," Anderson said. "Now, you're competing with the whole city and you're competing with establishments that you can't even be compared to — every kind of food at every level."

He's referring to the range of restaurants offered on the app, as well as the quantity. From pizza to sushi and from a mom-and-pop shop to national chains.

While he can only speak to the effect that the service has had on his restaurant, Anderson said he's not sure the increased of competition will ultimately be good for the city.

"I think it's important for people to realize that there's a vibrancy and excitement that's brought by restaurants, especially in city centres, that can't be recreated with take-away counters."

Competition for delivery services increasing

In response, McCrae said Skip truly believes there are many benefits the service brings to restaurants and to the city.

By expanding revenue streams, increasing customer bases and taking the burden of delivery out of the hands of establishments, she said these companies are adding something that was previously missing from the food industry.

Although Skip is the dominant player, it isn't the only delivery game in town. Recently, Uber Eats announced it will be coming to Winnipeg by the end of August.

McCrae said Skip the Dishes welcomes the competition and they hope to see more delivery companies operating in the future.