Coronavirus: Restaurants petition food delivery platforms to lower commissions

SINGAPORE - Restaurant owners have come together to petition food delivery platforms to lower the commissions they charge as food and beverage outlets here continue to bleed in the coronavirus pandemic. Enhanced safe distancing measures here mean restaurants can offer only takeaways and deliveries.

More than 2,500 restaurant owners and customers have signed the petition on Change.org since it went online on Wednesday (April 15). It was started by #savefnbsg, a coalition of more than 600 restaurants formed by restaurateurs Loh Lik Peng of the Unlisted Collection and Beppe de Vito of the ilLido Group.

It is addressed to three groups: delivery platforms, the Government and customers.

In an open letter to the platforms, of which the main players are Deliveroo, Foodpanda and GrabFood, the petitioners say: "Nobody has ever liked the rates imposed on us but we tolerated them because in the not-so-distant past, the money from your sales didn't form a core pillar of our revenue streams. We watched in frustration as your commission increased steadily from 20 per cent to 30 per cent."

An accompanying graphic shows how a restaurant makes a 50 cent net profit from a $25 sale, after paying rent, salaries, cost of ingredients, packaging, utilities, marketing and delivery commissions.

The petitioners are asking the Singapore Government to mandate that delivery platforms lower their commission by at least 15 per cent - following the lead of San Francisco, which capped fees at 15 per cent - saying the move would "play a huge part in our survival".

Finally, the petitioners ask that customers bypass the delivery apps and instead, order directly from the restaurants for takeaway and delivery. Many have come up with their own delivery systems to ferry food islandwide.

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The Straits Times spoke to six restaurant owners who have done more than sign a petition - they stopped using delivery platforms recently, and have made arrangements to ensure their food gets to customers islandwide.

Ms Janice Chi, who owns six-year-old Ishinomaki Grill & Sake at Palais Renaissance with her husband, stopped using Foodpanda and Deliveroo last week because of the high commission fees, and yesterday, sent them e-mail about the termination. She and her husband make the deliveries themselves, offering free delivery for orders of $80 or more, $20 for orders less than $80 and a 15 per cent discount for self-collection. She had been paying a 30 per cent commission.

She said: "We realised that this is a good thing and we know the food is in good hands. Our regular customers are so happy to see us."

Mr Cedric Tang of heritage fish soup restaurant Ka-Soh, with outlets in Greenwood Avenue, Amoy Street and Outram Road, has also ditched the delivery platforms, saying the 30 per cent commission cut his profit margin to 5 per cent. His brother, Gareth, designed an ordering platform, and delivery charges range from $5 to $15, depending on distance. They work with three cabbies and have a list of private-hire drivers to tap.

Mr Victor Ng, co-owner of Tess Bar & Kitchen in Seah Street, dropped Deliveroo and GrabFood and is using delivery platform Oddle instead. He pays a 10 per cent commission and the delivery charge is shared between the restaurant and the customer.

He and another business owner, Mr Ryan Tan of Curious Palette in Prinsep Street, said they were frustrated when they wanted to update their menus or push special promotions on the delivery platforms. The response, if they got one, was slow, they said. Mr Ng said orders were limited to the 3km radius around his restaurant, shutting out potential customers. Mr Tan, a member of #savefnbsg, has roped in friends to help him deliver his food and coffee islandwide. Delivery is free for orders $50 and up.

Foodpanda, which has over 9,000 restaurants and hawkers on its app, said that in the last month, it has had a 200 per cent increase in the number of food and beverage businesses offering delivery on its platform, but said it could not provide exact figures of how many joined from January this year .

Its commission rates range from 30 to 35 per cent. Foodpanda said it is working with Enterprise Singapore to waive fees for eateries to get onto the app, and takes no commission on orders for new sign-ups for the first month. Together with hawker food delivery platform WhyQ, it is offering customers up to 35 per cent off orders from hawker stalls. The discount is borne by the two platforms to encourage more people to support local hawkers.

Asked how it was responding to the petition, a spokesman said: "We appreciate feedback from our partners and customers and recognise that it is important to reflect and continually examine the ways in which businesses are affected and what more could be done to support each other.

"Foodpanda is doing what we can to offer our support to weather the situation. Foodpanda has not changed any pricing on menu items or commission fees to benefit from the Covid-19 situation. Foodpanda continues to review our support and initiatives with our entire community of restaurants, partners, riders and customers in mind. We hope to make a sustained difference where it is needed the most."

A Deliveroo spokesman said: "We are working closely with all our restaurant partners to understand their concerns and how best we can support them as Covid-19 continues to impact businesses. We welcome the support from Enterprise Singapore, which will offset 5 per cent of the commission charged by Deliveroo to all eligible restaurant partners."

The platform has 6,700 partner restaurants and said it has seen 700 new restaurants join since January, with another 200 expected to be added in the next two weeks. It declined to say how much commission it charges.

The spokesman added that Deliveroo has partnered Enterprise Singapore to introduce what it calls a "new capability development pack" to help restaurants transition from dine-in to delivery and takeaway. It will waive up to $360 of the fee it charges for restaurants who sign on, and provide free product photography to market their menus.

Also included are webinars, one-on-one consultations, marketing support and data and insights to improve restaurants' delivery performance and business models.

The spokesman added: "We have also introduced a new weekly payment service to boost cash for our restaurant partners. Starting later this month, restaurants will be able to receive money made from deliveries in a week, instantly improving the cash flow of thousands of restaurants across Singapore. This new payment process will give restaurants faster access to their delivery revenue, helping them cover their costs, whether it's paying staff wages or electricity bills."

Grab, which says it has over 10,000 merchant-partners, said it has added more than 1,500 food and beverage businesses since January this year. Like Deliveroo, it would not say how much commission it charges.

A spokesman said: "This is an unprecedented time for all businesses. We understand the difficulties our merchant-partners are facing given the huge disruption to their offline business. While food deliveries will not be able to offset all of our merchants' existing overheads, including rent from their stores, we have been working closely with them to come up with solutions to mitigate the situation.

"Some of these initiatives, such as Islandwide Deliveries, have helped some merchants to achieve some 30 per cent growth in their orders, and enabled others to reinstate their kitchen crew or even hire more manpower to meet the demand. We have also rolled out 0 per cent commission for self-pick-up orders which helps merchants who traditionally rely on walk-ins."

The spokesman added that "a majority of merchant commissions received is used to pay delivery partners on top and above the delivery fees they receive, and to cover operating costs such as insurance for the delivery fleet, marketing costs and after-sales service support. Grab does not 'earn' the full amount of commission received".

The Covid-19 situation, the spokesman added, has impacted consumers and delivery partners.

"On a platform where all four parties, including Grab, are interdependent, we want to be fair to all users. Any new changes to be introduced in favour of one party is not to be taken lightly as it will inevitably affect the other three parties in the ecosystem."

Like the other two delivery platforms, Grab said it had not increased its commissions.

"It is in our interest to see all users in our community continue to thrive, and we are committed to continue finding new ways to help all users to the best of our abilities."

Other initiatives include expanding its delivery fleet size quickly to meet increased demand from consumers and merchants.

"Under the GrabExpress Car programme, our driver-partners who have been impacted by the decline in ridership can now provide on-demand parcel and food delivery services at any one time during off-peak commute hours," the spokesman said. "This not only helps to boost our food delivery fleet supply, but also provides an additional earning opportunity for our driver-partners who are impacted by the reduced demand for transport rides."

Some food and beverage businesses, however, are looking at new ways to help themselves.

Mr Colin Chen, owner of six-year-old The Refinery, a restaurant-bar in King George's Avenue, is still with GrabFood.

"I have nothing against the delivery platforms," he said. "They have a business to run, costs to cover and they are providing a service."

He has set up www.foodhood.sg, tying up with six other food and beverage businesses in the Jalan Besar area so customers can order from multiple merchants on the list and pay one delivery fee, which is $8 for orders of $80 and under. Delivery is free for orders above $80. Aside from The Refinery, customers can order from cafe Chye Seng Huat Hardware, The Tiramisu Hero, Oberstrasse, Gudsht Cocktails, Morning, which makes Nespresso-compatible coffee capsules, and A.muse Projects, which makes Nespresso-compatible tea capsules. He uses a team of freelance drivers to make the deliveries, and the site went "live" yesterday (April 16).

He said: "This is an old-school, kampung-style activity. We just want to be able to ride through this period and continue to operate after."

But it will not be business as usual after the pandemic.

Ishinomaki's Ms Chi said: "After this tsunami, we have to relook how we do business."

This article was first published in The Straits Times. Permission required for reproduction.

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