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The downside of food delivery apps

Consider the fact that the first ever Menulog order in 2006 still involved a fax machine. Now, you click a couple of buttons, scroll, hit ‘next’ and then it’s a waiting game.

No need to get off your couch to order your food, no need to flick through dozens of paper menus, no need to call a restaurant, and loads of cuisine options for inspiration.

The online food delivery industry is projected to be worth $2.4 billion by 2025. Currently, it’s worth $600 million.

Convenience, anti-social society and an ingrained culture of ‘want it now’ are all factors that contribute to the success of delivery.

Families are becoming busier, parents are working later and ordering dinner sounds a whole lot easier than slaving away in the kitchen after a long day.

Of course, it’s also said that food delivery apps have introduced restaurants, bars and pubs to new customers. But are food delivery apps all they’re cracked up to be?

For the consumer, it may mean convenience, new cuisines and flavours, and never having to actually communicate with a human being, but what about the retailers?

When it comes to restaurants, food delivery apps seem to be the enemy, especially when it comes to how they survive and thrive.

The financial strain

Delivery apps are putting businesses under pressure, and it is taking a toll.

It has been noted by several restaurants that the commissions taken by food delivery apps are simply not sustainable.

While the four major apps – UberEats, Menulog, Foodora and Deliveroo – are reluctant to disclose the official commission or surcharge amount, Menulog put up their hand and declared a 12 per cent commission rate plus a 2 per cent processing fee.

The other problem lies in the fact that food retailers are often informed of the exact terms of agreement only once they’ve started the sign-up process.

What’s the answer?

While food delivery services may work for some, they may not be right for everyone.

For many restaurants, fear is driving their decision to sign-up to food delivery services. If you’re not online, do you really exist? As food delivery services grow, will restaurants be left behind?

What restaurants should be doing is working directly with consumers to eliminate the middleman. Ultimately, it’s up to the industry to set the pace of change.

John Saadie is founder and CEO of online food ordering platform, Order Up!

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