When it comes to restaurants hooking up with delivery service providers, it turns out that you either can’t live with them or you can’t live without them. While eateries admit that revenues have increased steadily after striking a partnership with such food delivery firms like Uber Eats, it turns out that profits have dropped, which has a lot of restaurant owners pondering over whether such a tandem might provide boom or bust, especially in a hospitality industry having to deal with fickleness and economic unpredictability.

The sticking point is the surcharge of partnering with the likes of Uber Eats and many of its competitors which include Deliveroo, MenuLog and upstart DoorDash. While the charge ranges between 30-35 percent, some agreements involve commissions as high as 38 percent. While it might attract some business, it might scare off other customers unable to foot the bill for the charge added to the total cost of the food being delivered.

Statistics compiled by the Restaurant and Catering Industry Association of Australia reveal that until 2018, food delivery contributed roughly two percent of revenue to the restaurant industry, worth about  $21 billion at the time.

Encouraged by the emerging trend, Uber Eats commissioned Deloitte to put together a study of the Asia Pacific Region in 2019 to project future trends. What looked promising in particular in Australia was that it was the only country in the region where food spending as a percentage of disposable income actually increased (from about eight percent in 2000 to 12 percent in 2018). It also predicted that increased technology and globalisation would be major drivers for food delivery, especially “data-driven food” apps used by consumers would spike prepared meal deliveries and boost restaurant revenue.

The report was likely encouraged by additional stats that saw the number of businesses using food delivery double from 15.4 percent in 2017 to 31.2 percent in 2018. But a subsequent survey by the Restaurant and Catering Industry Association of Australia involving 656 businesses told a more sobering story. Only 2.8 percent of them reported an increase in sales and profits, while 13.3 percent didn’t notice any changes in the performance of their businesses. But 53.9 percent of participants reported that revenue and business did increase, although profits dropped.

The media’s also documented anecdotal accounts from restaurants worried about food quality suffering from the use of delivery services, like fast food that would turn soggy by the time the consumables reached the consumer. Others indicated their signature entrees required reheating upon reaching their destinations, having cooled off during transport.

Still, delivery companies have grown to be a sector worth $1.3 billion according to the Deloitte report. And Uber Eats, in particular, believes the industry will continue to grow as long as it’s able to foster relationships with restaurants to ensure both parties profit from their partnerships.

However, one segment of the restaurant industry, the actual dining-out experience, is still resilient and might be bouncing back. According to hospitality company Silverchef, roughly one-third of consumers are physically going back to restaurants, due to expensive deliveries.


H&L POS – working with you to help you grow your business
H&L POS has been delivering POS solutions with extensive back of house and staff management systems to the hospitality industry for more than 30 years. As hospitality people at heart, H&L understand the critical requirements for each food and beverage operation. We have staff in every state of Australia providing direction and advice as you grow and as technology changes.
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