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Small Businesses Are Calling For Food Delivery Apps To Take A Smaller Cut Of Delivery Charges

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UAE residents are spoiled for choice when it comes to food delivery.

There are so many applications and services for helping get food delivered with the click of a few buttons.

It’s sometimes overwhelming to see the sheer volume of businesses available for food delivery, with hundreds ready to send their deliciousness to your door.

But some businesses are finding the apps take too high a fee for presences on the platforms.

The likes of Deliveroo, Uber Eats, Zomato and the like can take a fee on the order, of around 30% of the restaurant’s charges, making it feel like quite a low profit margin for the vendor.

The apps however, do offer wider visibility to restaurants and food venues that may otherwise struggle to get a busy orderer’s attention

Which is good for some businesses – and the orderers, but not necessarily all outlets.

Freedom Pizza owner, Ian Ohan has openly rejected the concept of delivery apps, choosing to employ his own riders to deliver pizzas to hungry UAE pizza-lovers.

Ohan says: “Third-party delivery companies typically charge restaurant operators up to 30% of the value of the order plus they charge AED7 to the customer. In simple terms – on an AED100 order, they are taking 37% which is simply not sustainable for any food and beverage merchant.

“In addition to the economic pitfalls, add aggressive tactics by third-party delivery companies and aggregators to create a gladiator style arena to pit merchants against each other in discounting wars that mainly benefit the platforms and also the fact that merchants are giving away the customer relationship and information and interaction to a third-party.”

However, general manager of Deliveroo GCC, Anis Harb says while the takings of the orders are a percentage, many businesses see an average business growth of around 30% by expanding the customer base

He says: “A successful delivery service also helps restaurants’ in-house service. Our research found that 75% of customers who had a positive delivery experience from a restaurant would be more inclined to visit that restaurant and dine in – so the delivery and in-house elements of a restaurant’s business are mutually reinforcing.”

Ohan says while visibility of restaurants is increased, so too, is the competition

He says: “There is no doubt that the third-party delivery and food aggregator platform generate large audiences, however I see that it is difficult for operators to express their brand on these platforms – they tend to be a mass menu of food, with little regard for the restaurant, what they stand for or their unique brand proposition.”

Interestingly, Deliveroo in recent times has opened the Deliveroo Editions kitchens around the city – enabling small businesses to expand their offerings

In places like JLT and Business Bay, where businesses can base themselves in shared kitchens with other businesses to focus on the delivery aspects, without footing large rental bills or maintaining a dine-in concept. This has been availed by several of the UAE’s smaller outlets, including Pinza, Chalco’s Mexican, The Salad Jar, Wild and the Moon and the like.

Making it easier for smaller restaurants to reach a wider market – however the cost of working within these facilities is unknown.

Percentages of takings vary dependent on the restaurant’s agreement with the apps but hover around:

  • Deliveroo 30-35%
  • Uber Eats 25-35%
  • Talabat Go 25%
  • Zomato Delivery 20-30%

One restaurant owner, wishing to remain anonymous called for apps to reduce commission and provide a tier system

She says that while her business is listed, it is a struggle at times to cope with the high cut that the apps take.

She says she would like to see rebates from the apps, or a system implemented to rank venues, reducing the commission based on orders driven to the apps.

Both she, and Ian Ohan recommend ordering direct from the source, as there are often more discounts and rewards for just that.

However, the question is, whether Dubai residents want the price tag, or the convenience.

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