Why Are Food Delivery Apps Biting The Hand That Feeds Them?

Posted: Nov 27, 2019

Australia’s hospitality industry is dying at the hands of the tech it has employed to save it. Despite their ubiquity, delivery apps are now cannibalising the food industry’s already slim margins.

Platforms such as Uber Eats and Deliveroo once started with reasonable rates of commission, however, now take approx 20-30% of the order.

Most merchants are today making a financial loss on every app-based order, unable to offset this and directly market themselves to new customers. They have lost control of their business to the tech.

The result is apps and tech platforms patting themselves on the back for giving restaurants a voice… all while slowly starving them.

While tech disruption is not a new phenomenon, a warning must be served. The best tech companies seek to serve the greater good, rather than cannibalise industries for their own benefit.

Online graphic design portal and Australian unicorn, Canva, has made headlines for equipping local schools and SMEs with an affordable design solution, despite scooping revenue away from costly in-house and agency designers. While stripping work from some, the greater collective good to society is empowering and disruptive.

Netflix is renowned for dethroning Blockbuster, not in a bid to monopolise video content consumption, but to better serve consumers and axe costly late fees. In doing so, it has opened a new market of subscription-video-on-demand services, propelling consumers into a realm of personalised entertainment. Welcome Stan, Disney+, hayu and more.

Somehow, this desire to help the greater good has been lost by tech in the hospitality and food industry. Platforms such as Uber Eats and Deliveroo are being slammed for spruiking people into restaurants, only to pocket a large chunk of change themselves.

For the already-hurting hospitality industry, tech apps have positioned chefs and restaurateurs as ancillary rather than main attractions.

Of course, most customers don’t know this.

Most customers assume the delivery drivers are paid from the delivery fee. However, if this was the case, perhaps we wouldn’t have such a problem.

High commissions mean tech is biting the hand that feeds it. It is eating into the narrow profit margins of the hospitality sector — the margin food businesses live or die by — simply because it is putting itself first.

The disruption mindset of the tech industry needs to change.

If the technology industry is serious about helping hospitality, it would seek to support merchants rather than skim already tight profits.

Hospitality-related apps should seek to understand the real issues felt by restaurant and hospitality owners.

What delivery apps give customers is choice and access. What they give restaurants is simply a line on the menu.

And when a customer orders that menu item, the restaurant never sees who that is from, nor is able to form any real relationships with them.

The transaction is conducted through the third-party as if restaurants were vending machines — the product is secondary to the convenience.

By Mark Calabro
November 26, 2019
Source: Smartcompany.com

Go-Wine Sharing and Promotion

Go-Wine's mission is to organize food and beverage information and make it universally accessible and beneficial. These are the benefits of sharing your article in Go-Wine.com

  • It Generates Free Traffic to your site.
  • Your Article Will Get Indexed Faster.
  • Your Google Rankings Will Rise. Google Rise Articles with Positive Participation & Contribution.
  • Your Article Will Reach New Customers and Audience. Go-Wine has a selected audience and visitors from over 120 countries.
  • You always receive credit - you will be cited accurately (Author, Website & Hyperlink).
  • The integrity of the Information is not compromised - you always will be linked to the most up to date version of your article.

Contact Us for more information.

© 2020 Go-Wine©. All Rights Reserved.
Designed by CX Web Design. Vision of Wine Business Academy