Not every restaurant on lunch start-up MealPass is loving the model — restaurateur Mark Barak took his rustic Italian restaurant La Pecora Bianca off the platform last week after what he calls a "bait and switch" in pricing, he says. MealPass allows diners to pay a flat monthly fee of $119 for unlimited weekday lunches, and in turn, restaurants on MealPass offer one set meal a day, which MealPass pays them for. But after La Pecora Bianca’s first month, MealPass changed the maximum number of meals that the restaurant could offer as a way to reduce the payment — without telling the restaurant first. La Pecora Bianca was stuck with extra salad materials. "We were buying ingredients and having our staff all ready, and they just changed it," Barak says. "That’s not how you run a partnership."
MealPass launched a few months ago, and initial responses from both diners and restaurateurs were largely positive, including from Barak. He did not disclose how much MealPass was paying the restaurant for the meals, though he said it wasn’t far from what walk-in customers pay and emphasized that he’d only stay with MealPass if the financials didn’t change.
But within a month of agreeing to certain terms, Barak says the start-up made it clear that they needed to reduce the amount they paid for meals. Although he was upset that they made changes without telling him first, he agreed to renegotiate for reductions in price at certain volumes. Then during the negotiation, MealPass changed the menu one day, again without notifying the restaurant, he says. Barak decided to cancel unless the company agreed to the original financial terms. "I’m very disappointed with them, and I feel that they kind of have been operating in bad faith," Barak says. "I think they’re going to start running into issues with premium operators like us, in terms of trying to build their business."
'A partnership is only a partnership if it works for both MealPass and the restaurant.'
MealPass founder Mary Biggins declined to discuss details of a deal with a specific restaurant. She added in a statement that most restaurants understand that their relationship with MealPass only succeeds if both MealPass and the restaurant make money. "A partnership is only a partnership if it works for both MealPass and the restaurant," she writes. "We're happy to see that this partnership works for most MealPass restaurants, as nearly every restaurant that we launched with is still using MealPass, with many adding additional locations."
La Pecora Bianca wasn’t the only restaurant that MealPass renegotiated pricing with after the first month. Michelle Gauthier, owner of Mulberry and Vine, also said that the company asked to pay her a lower rate not long after it launched. But unlike Barak, Gauthier didn’t mind the change. She still loves MealPass and even eventually added her Tribeca location to the platform. "You know what, I get it," she says. "They need to make money, too. Their business model didn’t make sense; I didn’t understand it. Of course they have to do this." She reevaluated the menu and added items that would be both easy to produce and could be offered to MealPass at a lower price. "Everybody’s got to take a hit on it if it’s going to work," Gauthier says. "A restaurant cannot expect to make the kind of profit with just a regular customer coming in."
Other restaurants knew that MealPass would eventually ask to pay less. Bombay Sandwich Co. received more money-per-meal from MealPass in the first month as an introductory rate to try out the partnership, says owner Shiv Puri. He now gives the company a cut that’s on the higher end of start-up commissions, not far from the 30 percent rate of UberEats or AmazonPrime. "The economics works in our favor still," he says. "It was definitely nicer making more money off of them before. My own philosophy is, once our fixed costs are met, any extra dollar is worth it." The majority of restaurants do not receive an intro rate, Biggins says.
'I feel that they kind of have been operating in bad faith.'
Several restaurants reached by Eater did not experience the same communication issues with MealPass that Barak did. Sandwich shop Bite noted that sometimes the MealPass menu offering sometimes doesn’t match up with items on their own menu, but the changes never made a big impact on operations or costs. "It’s definitely better than some of the other companies we’ve worked with," manager Samar Sajjad says. And Jude Rodriguez, owner of Spice Symphony, says that even though he doesn’t make much money by being on MealPass, being on it also does not add significant labor costs the way delivery services like Seamless do. "It’s just another channel for us to reach more people," he says.
Still, the upside’s not enough for La Pecora Bianca anymore, Barak says. Even if MealPass agreed to pay the rate they started with, he doesn’t think he’d get back on the platform due to the way the company treated the relationship. "It could have been a win-win for them and also for guests," he says. "But we have certain integrity and certain ethics. They weren’t meeting that."
Are you a current or former restaurant owner on MealPass and want to talk? How about a MealPass user? Either way, our tip line is always open for comments.