Food delivery services in the Economic Zone Formerly Known As Australia are in serious financial trouble tonight, after Scott Morrison has banned flights from India.
Citing a COVID outbreak in the subcontinent, all direct flights from India will be banned until May 15 which has hit the food delivery and transport industry particularly hard.
“It’s going to be tough to stay afloat,” Menulog CEO Leon Kamenev said.
“We’re running out of options where we can source third world slave labour that will take the hit for us, both financially and literally when riding on the footpath.”
A crisis meeting of the food delivery providers will take place tonight, where they are expected to ask for a bailout, with one source saying “no free handouts would be as unAustralian as our workforce.”
Harpreet Singh, an international student working for Uber Eats, stated it was discriminatory.
“How am I going to go back for weddings, festivals and every other minor cultural thing every couple of weeks in between working 100 hours a week? PR is already hard enough to get.”
Hahahahahahahahaha so true
has anybody ever delved into the math of these delivery services? there’s no way the delivery workers can be even making 3/4ths of minimum wage on them, i just cant see how they’re even close to a good deal for the rank and file suckers who all sign up to get screwed over.
that being said ive never used one even once.
I reckon the maths must be pretty bloody good.
Because the dudes doing the pedalling all seem to have masters degrees in IT (pedgineers) or business (pedalpreneurs)!
Stagmal, it has never been about the drivers making enough, but more the companies making money. These companies make 30-35% of the total food bill plus the delivery fee. My belief is only one or two of these companies will survive and that fee will go up due to lack of competition. The ABS shows that business failures are highest in hospitality, but it is getting to a stage that restaurants have no choice but to use them.
I didn’t realise that they take 30% of the food bill.
that must be at least half of the restaurant’s margin, right? I mean it’s great if the deliceroo mob generate the incremental sales that they then take a rake of, but surely by now it’s in the space where they’ve muscled in and are cannibalising sales that would’ve previously been made to visitors who now instead order in?
Fantastic leech model!!!
From my understanding restaurant margins are around 10%. Often restaurants will charge more through these services than dine in. However, Uber Eats has been publicly pressuring restaurants not to do this.
You are correct it is a fantastic leech model. Fantastic example of Porter’s five forces for businesses in that the restaurants are now dominated by a couple of large customers.
Nah, can’t be 10%. Nobody would do it for 10%.
I’d believe 40-50%.
If it was 40-50%, wage theft wouldn’t be the business model.
The profit margin is lower than what the delivery services charge.
The issue for restaurants is not just delivery services, it is the fact that in Melbourne the population has doubled since 2000 and the number of restaurants has more than tripled. Essentially the market is more than saturated. Add in that real household income has been flat since 2008 and you can see why wage theft is key driver keeping the industry afloat.
Ok, so let’s be generous (?) and say it’s 20% rather than 10%.
You sell 100 pad thais per afternoon at $15 each and have takings of $1,500, which nets you $300?
Do the little takeaways really stay open for such mean profits?
I don’t believe the stories about profit margin thrown around by restaurants.
Your traditional restaurant or pub that makes the bulk of their profit on selling an $8 bottles of wine for $45 yes might have a relatively slim margin on food, but then again are we talking net profit or gross because the net can be manipulated.
Almost every restaurant would be not declaring all the cash they receive, so yes I’m sure the figures coming from industry bodies or the ATO give the impression of the businesses surviving on pathetic margins.
But these Asian restaurants would be raking it in especially the well run ones (there’s a lot of bad ones but they don’t survive in one location too long). Every employee paid off the books $10-12 per hour, pocketing all cash, for Uber Eats and Menulog they raise prices at least 25% to offset what they lose (but it’s often business they probably wouldn’t have otherwise received).
To make up the master batch of Thai curry costs nothing, add some tiny pieces of chicken, throw in some vegetables, charge minimum $18.
Might only be open for 4-5 hours per day. If I were an Asian that was a good cook it’s what I’d be doing.
yeah, for sure.
the ato stars are interesting (https://www.ato.gov.au/Business/Small-business-benchmarks/In-detail/Benchmarks-A-Z/R-Z/Takeaway-food-services/) but they show that for smaller operations profit is about 15%-20% of takings.
it’s probably distorted (downwards) by excluding some cash sales from turnover and including owner salary in expenses.
so I reckon 30%+ wouldnt be unusual.
Have seen a number of takeaways abandon these services due to the fees, instead offering delivery themselves on a rotating basis -eg. south eastern suburbs Friday, eastern suburbs Saturday etc.
That places a soft cap on the amount that can be effectively leeched, doesn’t it?
youre not going to pay 35% of the menu price to the bike company of you can just hire a dude on a bike for $20/hr and wear that as a fixed cost.
I suppose under that approach you also drop off the online platform so perhaps lose some sales, so there’s that to take into account.
but it shouldn’t be too hard to work out which way you get left with the most follars
An informative chat 👍
I’ve refused to use those services. The few times I’ve been at friends/family that have used them, the food gas always arrived cold. Those experiences have encouraged me to continue getting off my arse and getting them myself.
Thanks Stewie. I agree about the cold food and especially since it costs more to have cold food delivered than to dine in at a restaurant.
True on the 30%, but many restaurants have an Uber cost for a dish and a direct pickup cost. A local Thai restaurant was refusing to get involved with deliveries but used an app called Table Time that takes a small set fee per order (pickup still required). Eventually to keep up they had to get onto Menu Log and Uber Eats but the price for a dish is 25% higher on those platforms vs Table Time (or over the phone). Anyone too lazy or pickled to do a pick up pays the price.
Please kindly behave more kindly to us sir
Delivery drivers are the modern equivalent of sedan chair carriers. This type of job should not exist in a wealthy, modern and fair society.
I completely agree. Whilst some societies are happy to have their poor being their maids, delivery drivers etc. I feel this is something we should not emulate. Given we are an economic zone rather than a society, delivery drivers will end up entrenched as the job that modern serfs have to do.