Singaporeans scrutinize profits of food delivery giants amid COVID-19 crisis

A graphic breaks down how much merchants are likely paying in commission to GrabFood. Image: Desmond Chua/Facebook
A graphic breaks down how much merchants are likely paying in commission to GrabFood. Image: Desmond Chua/Facebook

A heated discussion of how food delivery services are profiting from the COVID-19 crisis has been swirling online since yesterday. 

Sparking some of that discussion has been a Singaporean restaurateur analyzing their practices and a frequent customer demanding they show greater transparency and do more to help consumers and drivers.

Colin Chen, who owns The Refinery in Jalan Besar, published his breakdown of their business models, including the roughly 35% commissions paid by eateries to GrabFood, to argue that restaurants are dying while the three major delivery companies are receiving untold government subsidies. 

“I’m not discouraging anyone to use delivery apps, I merely wanted to present what I learnt today and it’s a hell of a wonderful business model to be honest,” Chen wrote online yesterday. 

In his widely shared post, Chen included a GrabFood email notifying merchants that the commission would be reduced by up to 5% during the current crisis. He said that wasn’t much help.

“I won’t bother to calculate the savings that the outlet would potentially enjoy from the 5% commission reduction (it’s up to 5% so meaning can be less guys?),” Chen wrote. 

GrabFood says on its website that it charges restaurants 30% on every order. A recent Business Times story said the major delivery platforms charge commissions between 20% to 40%.

Meanwhile, frequent delivery customer Ser En Low launched an online petition demanding the companies publish their price and fee structures openly, and channel revenues from any price hikes to their delivery staff, at least during the present crisis.

Ser suspects there has been a hike in delivery charges after realizing she was paying more for her regular orders. 

“Looks like the food delivery services are jacking up prices and we are not sure if these are going to the drivers delivering food to us … or are they are making use of this difficult time to make more profits from both consumers and the food stall owners? Shall we sign a petition to do something about it?” she wrote online yesterday, highlighting the lack of transparency in food delivery pricing, including additional “service fees.”

Ser noted that a three-piece chicken tender meal from Popeyes that usually cost her S$8.70 on Foodpanda had risen to S$9.10 after the lockdown began. 

A bowl of fishball noodles from KL Traditional Chilli Ban Mee in Paya Lebar via GrabFood went up from about S$5.70 to S$7.

In a statement today, Foodpanda told Coconuts Singapore it has not increased delivery fees and said prices are set by restaurants and hawkers.

Ser said food delivery could no longer be considered an elective luxury four months into a pandemic that has sickened thousands across Singapore.

“Whilst you can say that we can cook at home, to reduce the prices, but not everyone can cook or have the necessary equipment to cook at home. We can also travel to hawker centres and get the food there, but we should also try to reduce going out of our homes, as recommended by our MPs. Especially right now, food delivery to our homes is no longer just a luxury, but a necessity,” she wrote on the page.

With food delivery a common thread in everyone’s stay-home life, others jumped in to take up the topic.

One was a man named Desmond Chua, who visualized Chen’s mathematical breakdown in a graphic. It shows how squeezed vendors are by their overhead costs and need to absorb discounts to gain any visibility in the virtual foodcourts of GrabFood, Foodpanda and Deliveroo.

Those three were the main beneficiaries of a government scheme called the Food Delivery Booster Package, which is a cash subsidy for them to lower their commissions. The amount of money budgeted for the program was not publicly available.

Chen, the restaurant owner, said “numerous F&Bs will soon die because of the Einstein level math as described above.”

Though it did not address the commissions it collects, Foodpanda’s statement said it tries “to ensure all dine-in prices and delivery prices are matching” so customers pay the same as they would in person.

GrabFood did not respond immediately to inquiries sent by Coconuts Singapore. 

Deliveroo said earlier this month it was paying its restaurant partners weekly rather than at the end of the month to help them with cash-flow issues. In a recent update to its Australian partners, the company said it could not provide commission relief as the outbreak has been “challenging for all businesses and we’re providing assistance where we can.”

Chen urged Singaporeans to put in a little more effort to cut out the middleman by ordering direct whenever possible. 

“For those looking at your delivery apps right now, thinking about what to order in for dinner, supper or whatever meal is it, I encourage you to order directly from your favourite outlets by going to their websites, calling them, WhatsApping them or sliding into their DMS on IG to place your order instead… You could do with the short breath of fresh air,” Chen wrote. 

Several people replied to Chen that they were unaware the delivery companies charged such high commissions.

“Well said Colin, I’ve been reliant on food delivery apps and only just found out how much commission they charge (30-45%?). Doesn’t seem fair so for the first time yesterday I ordered directly from the restaurant which had a flat $5 delivery charge,” Facebook user Jeannie Lim said.

“This is why I’ve started a free, non-profit directory Where Got Food? to list all eateries doing their own deliveries islandwide, to combat the high fees from these guys. It’s just not right at this time,” Facebook user Amanda Tee wrote. 

Thinking of ordering directly from local food establishments? A number of people have put together information on where and how to do so. 

They include the Kudos SG Facebook group, the Singapore Food Promotion and Delivery Facebook group, Dabao.life, WhereGotFood.sg, the Hawkers United – Dabao 2020 Facebook group, and Manyplaces.sg

 

Other stories you should see:

Pay it forward: Singaporeans urged to donate S$600 payouts to those who (really) need them
Advocates and patients fume after Singapore deems mental health services ‘nonessential’
Singapore students ‘disappointed’ graduations canceled, not postponed

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