Home delivery disruptors cause grumblings among food service providers

Digital disruptors are damaging the restaurant industry by encouraging patrons to stay home and eating into profits, claims a report from Restaurants and Catering Australia (R&CA). Its 2019 annual Benchmarking Report, one of the areas of greatest concern indicated by restaurant, café and catering business owners was the negative impact of digital disruption.

R&CA’s CEO, Wes Lambert, said, “High streets are falling silent and neighbourhood restaurants are push to their limit as delivery services discourages bums on seats. There is only one winner between the platform and the restaurant, the platform wins due to the exorbitantly high fees charged and the restaurants lose as they see their profits decline even as their revenue increases.

“Some restaurants are finding themselves pushed to the brink of closing – a bad outcome for our social precincts, restaurants patrons and, ultimately, home delivery consumers. Others are ditching the platforms altogether,” said Lambert.

“Under the online delivery platforms, where under the ‘partner ‘model, the platform is profitable, and the restaurant is not. Restaurants have been forced into taking on an unwanted business partner they didn’t ask for and who takes a 35 per cent cut. At that rate, meals become unprofitable for the restaurant.

This year’s survey revealed ongoing and significant growth in penetration of online food delivery platforms – 53.8 per cent of restaurants surveyed use online delivery platforms.  That is more than triple the number (15.4 per cent) from the same survey in 2017.  In 2018, the percentage using delivery platforms was 31.2 per cent.

Of the restaurants surveyed, 46.2 per cent said they didn’t use delivery platforms, compared to 68.8 per cent in 2018 and 84.6 per cent in 2017.

When asked which delivery platforms they prefer, 26.2 per cent said UberEats, 22.3 per cent said Menulog, and 3.8 per cent said Deliveroo.  Of those surveyed, 32.3 per cent use combination of platforms and 7.7 per cent use all three delivery platforms.

More than 63 per cent said their primary reason for signing up to a delivery platform was to increase their customer base. Others (32.03 per cent) said they were forced to participate because their competitors were using these platforms.

Respondents overwhelmingly said that they had experienced an increase in revenue but a decrease in profit (53.9 per cent) and 32.8 per cent said they experienced an increase in revenue and profit and 13.3 per cent indicated no change.

More than half (55.5 per cent) said that fees associated with online food delivery were so high that it was impossible to make a profit using the platforms. Only a quarter of businesses (25 per cent) said that platforms provide a convenient service that allows restaurants to increase their revenue and 19.5 per cent indicated they encourage customers not to go out and buy directly from the business.

These answers indicate that more than 70 per cent of businesses surveyed believe that online food delivery is negatively impacting the hospitality industry.

Just over 50 per cent of businesses said they currently used an online booking provider within their business, down slightly from 55.6 per cent in 2018. This remained up from the 41.7 per cent identified in the 2017 survey.

The Fork was the number one response (36.4 per cent) when asked which online booking provider restaurants used. It was the online booking provider of choice among businesses surveyed.  Now book it was preferred by 17 per cent of respondents. Others (13.6 per cent) preferred other online booking providers (13.6 per cent).  While 10.2 per cent named Dimi as their favourite, 9.3 per cent preferred Quandoo 9.3 per cent, 7.6 per cent preferred Opentable, 4.2 per cent preferred Obee, and 1.7 percent said BookBook was their choice.

Online booking providers
Just over half (50.7 per cent) respondents said they used an online booking provider within their business, down slightly from (55.6 per cent) in 2018. This is still up from 41.7 per cent in 2017.  When asked which online booking provider they used, the top response (36.4 per cent) was The Fork.  This was followed by Now Book It (17 per cent), Dimmi (10.2 per cent), Quandoo (9.3 per cent) and Opentable (7.6 per cent).

Social and digital marketing channels
Lambert says, “This is the first year we asked businesses how they use social and digital marketing channels and the impact this has had on their businesses.  This is clearly an important tool for their businesses because a significant number (65.56 per cent) indicated that they spend money in this area.  Facebook was most popular with half of our respondents naming it as their most used marketing tool.”

Payment systems
An overwhelming number of businesses (92.3 per cent) indicated that card payment – either credit or debit card, was the most common payment method, followed by cash (2.56 per cent), then phone touch payment (0.9 per cent).

When asked about payment processing methods, the most common form of card payment was PayPass or Tap & Go, with 79.83 per cent indicating it was the method of choice for customers. This was followed by 12.88 per cent using PIN input, 2.2 per cent using smart phone payment, and 3.9 per cent use online payments (through booking platforms).