When Restaurants And Food Delivery Apps Clash, Nobody Wins

What goes into a food delivery order? For most, it starts with a tap of a button and ends when the takeout boxes are firmly in hand. But there’s a lot more going on behind the scenes — that is if the #savefnbsg furore was anything to go by. 

For the last two months, social media was regaled with tell-all tales from restaurateurs of startling commission rates taken by apps like GrabFood, foodpanda and Deliveroo. The platforms were typecast as The Man, out to squeeze already-distraught restaurants out of their last dollar, and the restaurants, the pitiable little guys struggling to cope in a time like no other.

In between the kitchen confessionals emerged the #savefnbsg movement, a coalition of restaurants banding together to raise awareness about their plight — and to call them out for their high commission fees.

As the petition (which can still be viewed here) goes: “High commissions charged by delivery platforms literally rob restaurants of every potential to earn their keep… Should food delivery platforms be able to profit from tragedy and build their business upon the plight of F&B operators?”

Since then, platforms like WhyQ have emerged, boasting zero commission and onboarding fees for their restaurants. They make up the difference by charging a 6 percent markup on food prices that’s borne by customers — something that many existing food delivery apps already possess on top of commission fees.

For many restaurants, they now face the very real possibility of shuttering during the seemingly endless circuit breaker period — one that’s not helped by high commission rates taken by delivery platforms, as Anthony Yeoh, chef-owner of Summer Hill, says.

“That commission structure was, at best, tolerated during normal times,” says Yeoh, who adds that his restaurant has stopped using these delivery apps. “The current crisis reflects that the system doesn’t hold up — and it highlights that it doesn’t support the F&B business model.”

And it’s not just sharp commission rates that have restaurateurs up in arms. Some say that the big players in the food delivery game have been slow to adapt to changes during this period. 

Co-owner of Tess Bar & Kitchen Victor Ng says that during this period, real-time updates and promotions have become essential — something that he says most platforms are “not flexible enough” to cater to.

“Big commissions must be proportionate with the services that they provide,” says Ng, who now uses alternatives like Oddle.me and private arrangements with delivery providers. (For its part, platforms like GrabFood have since introduced initiatives like islandwide delivery for certain restaurants.)

But restaurateurs insist that they aren’t out to demonise these delivery platforms — that all they want is fair dialogue.

“The #savefnbsg movement wasn’t formed to fight delivery apps,” says Jeremy Cheok, the restaurateur behind concepts like JAM at Siri House and Slake. “It was to give the F&B industry a voice, and to address the difficulties faced by the industry during this challenging time.”

While Cheok — who adds that he “stands with” the movement — believes that restaurants shouldn’t blame the delivery apps for a situation they didn’t cause, he thinks that these apps should “volunteer to take a hit together with (restaurants)” to make good on their ‘we’re partners’ mantra.

Not every restaurant feels hard done by delivery platforms. Founder of The Daily Cut and Muchachos Jonathan Yang sees things differently. “It’s not simply a matter of restaurants versus the apps,” he says. “It’s not as if they pocket that entire 30 percent as pure profit — the bulk of it goes to the riders, and what’s left has to go towards paying their own overheads as well.”

Convenience, in short, comes at a cost — in this case, not just to restaurants, but to the delivery platforms too.

“Grab does not ‘earn’ the full amount of commission received,” says a Grab spokesperson. “On a platform where delivery-partners, restaurant-partners, customers and Grab are interdependent, we always do our best to be fair to all users.”

It’s also why any new changes have to be carefully considered, the Grab spokesperson adds — because there’s a chance it might adversely affect someone else in the system.

Beyond delivery fees, there are also some “less obvious” costs that come with operating a food delivery company, as foodpanda Singapore’s Managing Director, Luc Andreani, says.

“A large percentage of foodpanda’s commission rates go to paying our fleet of delivery riders, our customer service desk, marketing support, as well as improving and maintaining the technology and operations,” says Andreani, who adds that the company also provides riders with all the masks and sanitisers they need during this period.

Deliveroo’s Interim General Manager and Director of Growth and Marketing, Sarah Tan says: “When one starts to consider the manpower involved in ensuring the platform runs smoothly and efficiently — in making monetary transactions seamless, in delivering orders to customers’ doorsteps on time — then one begins to realise that the commissions we charge only go part way to covering that investment, and the percentage that we take only just covers the costs we incur.”

Many delivery platforms say that they have rolled out numerous other initiatives to help restaurants tide through this time. Last month, GrabFood launched a pilot scheme for hawkers with reduced commission rates. To help ease the transition for some, foodpanda has waived onboarding fees for newly-initiated restaurants and take no commission from their orders during the first month. Meanwhile, Deliveroo’s new weekly payment system allows restaurants faster access to their delivery revenue.

Despite the good that these the measures do, they don’t quite answer to the #savefnbsg petition — that is, to lower commission rates. 

But slashing commission rates isn’t the panacea that people think it is, says Deliveroo’s Tan. 

“That will hurt our ability to pay our riders and employees, and it will hurt our financial health to be able to operate at the level we currently are,” she explains.

Less commission rates could translate to lower earnings not just for the delivery platforms, but for the many riders that rely on these gigs to make ends meet — including those that are using food delivery as a path back into the job market.

The Daily Cut’s Yang has a better — if potentially unpopular — solution: charge customers more for delivery. 

“I don’t know of too many people who would be okay with paying $9 to $12 to deliver a $30 meal,” he deadpans. “Right now, that additional cost is borne by the restaurants.”

It stands to reason: almost all the platforms used to offer some form of a free delivery plan for customers, often at drastically reduced prices. Foodpanda’s $9.99 plan gives 50 free delivery vouchers a month, while Deliveroo’s Plus programme granted unlimited free delivery for $14.90.

When Grab cancelled their free delivery subscription, a wave of disgruntled customers took to social media. “Thank you for cancelling it as a service to people just when we need more free deliveries during this Circuit Breaker period,” wrote one user. “I’m not paying your at least $6 delivery fee because of my subscription.” 

It uncovers something that hasn’t yet been spoken about throughout the #savefnbsg furore: how willing the customers are to help restaurants make up for their shortfall.

But The Daily Cut’s Yang concurs that no platform will be willing to “shoot themselves in the foot” by being the first to raise delivery fees for customers.

He says: “Instead of decrying food delivery companies for how much they’re taking, perhaps we need to first ask ourselves how much we, as consumers, are willing to pay.”