Should we delete our delivery apps?

Joseph Vargetto, owner/chef at Mister Bianco restaurant in Kew says managing their own delivery is always better.
Joseph Vargetto, owner/chef at Mister Bianco restaurant in Kew says managing their own delivery is always better.  Photo: Eddie Jim

Calls to boycott third-party delivery apps are ringing out around the world as struggling food businesses protest refusals to lower crippling commissions. But how black and white is the issue?

Restaurateurs complaints have merit. Since restrictions began, the delivery business has been booming. According to a real-time spending tracker developed by analytics firm AlphaBeta, food delivery is up an average of 156 per cent nation-wide and as high as 412 per cent in areas such as Sydney's Burwood and 291 per cent in Melbourne's Maroondah.

The commission taken by the major apps, Deliveroo, UberEats and Door Dash ranges from 22.5 to 35 per cent for delivery. Before the shutdown, restaurants offering delivery were already angry that these orders typically made them no money since restaurant margins sit under 10 per cent. But they considered a delivery offering to be a cost-neutral exercise in marketing since they were open and serving dine-in trade. Under a take-away only model, those fees, which are uncapped, have become unmanageable and unreasonable.

Paul Schulte, co-founder of Prince of York bar in Sydney, is delivering alcohol and food during the coronavirus ...
Paul Schulte, co-founder of Prince of York bar in Sydney, is delivering alcohol and food during the coronavirus pandemic, but bypassing the traditional delivery apps. Photo: Janie Barrett

Despite significant pressure, neither company has lowered commissions on their delivery service. Instead, they invited customers to add a tip to their order, which they would match.

A spokesperson from UberEats defended their position saying, "our commission structure reflects our level of service and what is necessary to safely and reliably sustain our operations for restaurants, their customers and delivery-partners."

Deliveroo echoed these sentiments, telling Good Food that their margins were too slim to scale down. "Overall, Deliveroo is not yet a profitable company," a spokesperson said. "The money that we earn on every order goes towards covering the costs that come with operating a national three-sided marketplace."

"Having your own service is always better" says Joseph Vargetto, chef-owner of Mister Bianco.

Both companies cited driver fees, marketing campaigns and platform investment among these costs.

Some restaurants have found it can be comparably expensive to bring the service in-house. Anthony Ivey of Melbourne's Shortstop Coffee and Donuts said "when we sit down and calculate the average cost of delivery including labour, car costs and petrol it would be 30-35 per cent." Time consuming administration could make that higher. Others said their in-house delivery costs were driven up because they gained fewer of them when not using the large platforms.

But other operators think setting it up for yourself is worth it. 

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Paul Schulte, co-owner of Sydney's Prince of York wine bar, began their own delivery from day one of the shutdown, but joined UberEats and Deliveroo to advertise that they were operating. He has since pulled both and says "there's a lot of work that goes into starting a new business [like delivery] that you don't know. Making sure delivery times are right and not ruining your business." But once word spread they were able to set their own delivery distance beyond Uber's 10km limit. They now organise one major drop off to northern beaches which Schulte says "for $1000 worth of orders it costs $60 wages instead of $350."

Joseph Vargetto, chef-owner of Melbourne's Mister Bianco avoided the third parties from day one, instead dropping off his restaurant's lasagne, braised beef cheeks and sauces in Mini Cooper cars and calling the experience "The Italian Job." A month in, he says the delivery expense is probably comparable, "but having your own service is always better. The driver can be dressed in a clean uniform, be happy and generous when delivering and represent the business with more pride."

Restaurateurs said keeping their own staff in work by doing deliveries was a main motivator, but so was that ability to manage craft an experience. Sculte, who encourages diners to download the restaurant playlist, said keeping customers engaged with the business was key whereas there is "no accountability" with third party transactions. Data is owned by UberEats and Deliveroo, meaning there is also no opportunity to resolve issues should a customer complain.

Joseph Vargetto, owner/chef at the Mister Bianco restuarant in Kewsays doing their own delivery is always better.
Joseph Vargetto, owner/chef at the Mister Bianco restuarant in Kewsays doing their own delivery is always better. Photo: Eddie Jim

Companies like Kounta, Mr Yum, Bopple and Hungry Hungry to win business of disgruntled restaurants. Their software allows businesses to process orders for which they take between a 4.5 to 5.9 per cent commission. Businesses can complete their own deliveries or use a third party like Drive Yello which charges a flat fee of $13.50.

Those costs still represent a challenge for businesses who don't feel they can pass it on to customers, but for orders over $50 it represents a much more manageable cost. 

For confused consumers there is one way to ensure their money is going directly to the restaurant: order direct, and pick it up.