Support The UAE's F&B Sector Hit By The COVID-19 Crisis: A Call For Delivery Apps To Cap Their Commissions At 10%
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Change. A constant within any organization. It is particularly a requirement when it comes to working in the F&B sector, which requires constant innovation to ensure a restaurant remains relevant in a competitive environment, whilst disrupting static industry practices.
Today, the global impact of COVID-19 across industries exceeds trillions of dollars, and every government and country is evaluating the sufficiency of their health infrastructure to deal with the COVID-19 pandemic. Consequently, to reduce the increasing rate of infections to their residents and citizens, they have implemented social distancing measures such as closing down all dine-in-restaurants and public venues.
These measures from the government's side are the right decision to curb this pandemic, and thus make it a necessity for the public and private sector to comply and find ways to navigate new business models to keep the economic activity ongoing. This regulation is both a loss and gain to different parties in the F&B sector supply chain, where dine-in only restaurants have customers cut off completely, and have to resort to delivery-only models to ensure the survival of their businesses.
With empty dining rooms, restaurants are depending on pickup and delivery orders more than ever. Amid the mandated dine-in restaurant closures, actual restaurant spaces are only relevant for preparing food-to-go, and consumers are more dependent on food delivery services than ever before. However, this challenge has created an uneven playing field and an unequal opportunity for delivery aggregators to run a one-sided show.
Sheikha Al Mheiri, founder, MAD Investments
Sure, there’s a lot to feel good about when we support our local restaurants by ordering prepared meals that appear on our doorsteps with the touch of a screen. But what we need to understand is that we might actually be hurting our favorite restaurants by relying so heavily on food delivery apps. One of the problems is the business model. While diners only see orders and/or delivery fees added to their bills, the apps are actually profiting far more from a less-visible fee: for every meal delivered, those services charge restaurants a percentage of the entire order, around 30%.
Given the scale of the challenges facing the industry, and the surge in demand for online delivery services, it is incumbent on delivery companies to immediately lower their commission. To maintain the partnerships built with restaurants, apps will have to accommodate some extension of reduced fees. These companies need to understand the difficult situation people are in right now, and should want to help, instead of actively looking for maximum profit. For us to be able to sustain ourselves, we need the extra money.
There needs to be a sense of togetherness by all the parties involved -the consumers, restaurants, and apps- to make sure food delivery is more accessible. People using mobile and online apps have to understand that the expenses fall on the restaurant, and that the fees imposed to us are greater than fees for customers. The delivery fees aren’t how these apps make money- it’s the commission on the total order. But these are desperate times, which is why many restaurant operators have found themselves signing on with these apps.
Given this scenario, food delivery companies are booming right now, and restaurants are barely hanging on. While globally industry stakeholders join forces to braise through the storm, splitting the impact in varying proportions, here in the UAE, we are yet to see a similar trend. For example, DoorDash, a US-based aggregator, has announced that to help independent restaurants the platform will offer zero commission for 30 days, and waive commission fees on pick-up and delivery orders for existing partners.
It is with this idea in mind that I and my peers in the UAE’s F&B arena have initiated the CAP@10 initiative, which is basically a call to delivery apps to cap their commission at 10%. This initiative of CAP@TEN is neither a permanent campaign, nor an absurd attempt to break the bank for these delivery aggregators. In essence, what they give up in reduced commission, they are sure to make it up through a heightened demand for their services.
Looking at it from a different angle, it’s a basic call for these entities to be socially responsible, and to take their fair share in supporting the F&B industry period in these unpredictable and hard times. For some of these delivery apps, they are trading in the stock exchange- for them, this is just a little hiccup. What’s in line for us, however, is not just loss of business, but loss of jobs and welfare as well.
While we hope that UAE delivery apps will listen to us, in the meantime, what can diners do to support their favorite local restaurants during this trying time? For starters, opt to order directly from the restaurant, if you’re really trying to provide the biggest bang for your buck. Remember, this doesn’t just affect me, it affects every single eatery in the country- everyone who is basically trying to keep their businesses afloat, and keep their workforces employed as well. So, support us- #supportlocal.