Here's how food delivery services make you spend more

Foodpanda, GrabFood and Deliveroo -- these food delivery services have become ubiquitous names in households as their popularity soared in recent years. In a study commissioned by Deliveroo, the biggest reason for using these apps is convenience.

Other cited reasons include the availability of regular promotions, the extensive variety of food options and efficient delivery service.

However, is the price of convenience worth it for the added costs you pay? And, do the regular promotions provided by these food delivery services really help to offset the additional costs involved in delivering your food?

We take a look at the top 3 food delivery services in Singapore and examine some of the additional costs you end up paying when you order through them.

#1 DELIVERY CHARGES

Delivery charges are fees added on top of your order to compensate the rider for making the trip to deliver your food.

Typically, they are variable and dependent on factors such as the demand-supply ratio of available riders and merchants, distance-based charge.

Let's take a closer look at the charges involved for each food delivery service:

A delivery fee adds up to the cost of your order, especially when you purchase a lower value item.

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For instance, the cost of ordering a $2 bowl of Japanese rice on Deliveroo would add up to a whopping $10 because of delivery charges and small order fees involved. On GrabFood too, a small order of a $6.50 Seafood Mee Goreng adds up to almost twice as much at $11.50 because of the delivery charge.

In these cases, it would make sense to bulk up your order or take on multiple food purchases to spread the costs of the flat delivery charge involved in each order on the app.

#2 MINIMUM ORDER REQUIREMENTS

Some food delivery services require you to make a minimum spend in order for your order to be processed. For instance, Deliveroo charges a small order fee of $5 for orders below $12.

On the other hand, Foodpanda charges the difference to the minimum $10 spend and GrabFood does not charge a fee at all regardless of how small your order is.

Having to hit a minimum order may mean that you unnecessarily bulk up your order and buy more than you need to. Alternatively, paying a steep surcharge lowers the value of your order and makes the price of convenience much more expensive than it is worth.

#3 PRICING AND MENU DIFFERENCES

In certain cases, food available on the app is more expensive than how it is priced in restaurants. There have been reports on price inconsistencies on some restaurants, who mark up their food items in a bid to cover commissions and GST costs.

Some restaurants marginally increase prices to make up for the customary service charge that food delivery service providers impose on them. Usually, the menu prices are not under the purview of delivery service providers.

Additionally, restaurants may not offer lower-value items on their food delivery menu, to encourage customers to increase their spend for each purchase.

#4 PSYCHOLOGICAL FACTORS 

There are psychological factors that make it easy to over order when you are buying food through a food delivery app.

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When you make an order, you may want to maximise on the delivery charge or time spent on waiting for the food. This creates a tendency for you to over-order more than you need to. Additionally, time-restricted deals may also encourage impulsive spending on food that you do not actually want or need.

Delivery food service providers like Deliveroo and GrabFood provide meal subscription plans too. For example, Deliveroo Plus is a plan which offers consumers a flat fee for free delivery, extra discounts and offers for a flat fee of $14.90 a month.

GrabFood also offers a monthly food plan subscription where users can enjoy zero delivery fees at $9.90. However, going onboard with these subscription plans may not actually be as worthwhile if you do not make frequent purchases from them in the first place.

THE PRICE OF CONVENIENCE VARIES DEPENDING ON YOUR USAGE

Ultimately, the price of convenience on each food delivery app varies depending on the consumer's habits and pattern of usage. Understanding the unexpected costs involved in buying your meals off the food delivery app helps you to make the most value out of the service.

Sure, there is a cost involved and nothing comes for free - including discounts, vouchers, promotions and convenience. However, you may make the best out of it if you understand how you use it and can work that to your advantage.

This article was first published in Dollars and Sense.