STEVE INSKEEP, HOST:
Uber, the ride-hailing app, is in business with hundreds of virtual restaurants. These are restaurants that exist mainly online delivering food to your house via a service called Uber Eats. Uber says it is helping restaurants grow their businesses and providing a service to customers. NPR's Jasmine Garsd reports on how it works and why it's such a divisive issue in the food industry.
JASMINE GARSD, BYLINE: It's a chilly autumn afternoon. But inside a little Brooklyn bakery, it's hot and busy. La Gran Via Bakery, founded in 1978, makes typical Latin goodies - coquito, tres leches and homemade dulce de leche and cakes. As I walk in, one customer is ordering for a birthday.
UNIDENTIFIED PERSON #1: (Speaking Spanish).
UNIDENTIFIED PERSON #2: (Speaking Spanish) - happy birthday, Roni (ph).
GARSD: Behind the pastry counter in a corner, there's a little grill with meat patties sizzling.
(SOUNDBITE OF MEAT SIZZLING)
GARSD: A few months ago, Uber Eats approached the bakery with a proposition that sounded bizarre to owner Betsy Leyva - why don't you set up a virtual restaurant?
BETSY LEYVA: I was like, are you crazy? Like, what do you mean? Like, what are you talking about? Like...
GARSD: A restaurant that exists solely online. Uber Eats suggested they serve burgers, nachos. But Leyva decided to give it a shot. That's how Brooklyn Burger House was born. Leyva says it might be virtual, but the profits are real.
LEYVA: We've increased our sales by about 30 percent, so it's very exciting. It is very exciting.
GARSD: Elyse Propis leads virtual restaurants at Uber. She explains that people use Uber Eats to search for food.
ELYSE PROPIS: And when we see people searching for something but not finding it, that signals to us that there is an opportunity and there's unmet demand.
GARSD: Then Uber eats approaches an eatery and suggests they create a virtual side restaurant with the dishes that people are looking for but can't find enough of. Daniela Galarza is a senior editor of Eater Magazine, a publication about the industry. She says in the restaurant biz, the delivery part has always been a headache.
DANIELA GALARZA: Where they have to pay somebody - they have to figure out if they need to insure them. You know, they have to figure out the delivery distance. Do they need to provide them with a vehicle, a car, a bike, whatever it may be? Whereas Uber - it's already built into that platform.
GARSD: Not everyone sees Uber Eats and the virtual restaurant as a good thing.
JAY JERRIER: You know, I haven't had the stones to say, all right, cut them off. I mean, although many, many people would love to just tell Uber to go, you know, jump off a bridge.
GARSD: Jay Jerrier owns Cane Rosso, wood-fired pizzerias in Texas. They specialize in thin crust. You know what else is thin, he says? Profits on any restaurant, and Uber Eats is taking a big slice.
JERRIER: You know, because they charge us between 30 and 35 percent of whatever the bill is. And then the customer pays anywhere from, you know, 2 bucks to 6 bucks for the delivery plus a service fee plus credit card fees. So you know, it's nuts.
GARSD: Uber Eats wouldn't provide specifics on how much it charges restaurants. It says it varies by location. Jerrier says for all the promises of expanding a customer base, delivery is just never as profitable as someone dining in. And it's not just that.
JERRIER: You know, when I was growing up, it's, like, I loved, you know, Thursday, Friday, Saturday because I knew there was a chance - just a chance - that we may be going out to, like, the neighborhood restaurant.
GARSD: He wonders, are we losing that? But Jerrier still uses Uber Eats to deliver his pizzas. He feels he can't say no because, for better or worse, big tech has staked its fork deep into America's dish.
Jasmine Garsd, NPR News, New York.
(SOUNDBITE OF SCHWARZ AND FUNK'S "BONJOUR IBIZA")