19 January 2018

Online food delivery platforms taking off in Canberra but restaurants warned to do their sums

| Glynis Quinlan
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One of Deliveroo’s Canberra riders, Hugh Bosman. Photo supplied.

Online food delivery platforms are taking off in Canberra with relative newcomers Deliveroo and Uber Eats seeing rapid growth in customers and restaurant partners while long-term operator Menulog says it is growing ‘exponentially’ in the city.

However, a popular Canberra restaurant is calling on fellow restaurateurs to think twice before giving up their hard-earned profits to multinational organisations and the industry representative body also stresses the importance of businesses doing their figures before signing up.

With Morgan Stanley research released this week showing business from the online platforms is set to boom in Australia, Canberra appears to be firmly part of the trend. Menulog, which started in Canberra in 2006, says it has 150 plus restaurant partners in the city and is seeing exponential growth.

Deliveroo started in Canberra last March and says Canberra is one of its fastest-growing locations, while Uber Eats started here last July and already boasts 140 restaurant partners.

While a number of Canberra restaurants are singing the praises of the online food delivery platforms in providing new customers for their food, Lachhu Thapa, the owner of The Hungry Buddha restaurants in Belconnen and Farrer, is sounding a warning about signing up to online food delivery services that charge commissions as high as 35 per cent.

Mr Thapa has knocked back offers to sign up with Uber Eats and Deliveroo and believes that they don’t offer enough to warrant such high commissions, particularly where a business has already set up its own home delivery infrastructure.

Mr Thapa would rather keep working directly with his customer base and offering them good value and believes other businesses should think about whether the figures really add up when it comes to these services.

Owner Lachhu Thapa

Owner of the Hungry Buddha, Lachhu Thapa. Photo by Serina Huang.

“I want every small business owner to think about it,” Mr Thapa said.

“We are the ones working in the community and providing jobs.

“Do you really want to give 35 cents in every dollar to a multinational?”

Restaurants warned to do their homework

Mr Thapa’s concerns are echoed by the Restaurant & Catering Australia CEO Juliana Payne who says the online delivery platforms can provide a great way to open doors to new customers but they won’t work for all restaurants and they need to do their sums.

“Don’t just jump in with your eyes closed,” advised Ms Payne.

“You’ve got to make a lot of new meals to pay the commissions and still make a profit.

“It’s not going to be a lifesaver if you are not doing well already.”

Ms Payne said it’s important for restaurants to do their homework and look at all the options including whether the restaurant is suitable for this type of delivery, whether its food will “travel well”, what the commissions are, and whether the projections show that the restaurant will make money out of it.

“The ones who succeed at it are the ones who have done the ground work before so that they are not selling to the same people anyway.”

Ms Payne said it is still early days and that some restaurants are “dipping in and out” of using the online food delivery services.

“Some are trying it and pulling out and saying we’ll just stick with what we’re doing,” she said.

Ms Payne said that Restaurant & Catering Australia had partnered with Deliveroo in order to educate interested restaurants and cafes about how to use the service and to weigh up whether they could achieve what they wanted.

According to Restaurant & Catering Australia’s 2017 Industry Benchmarking Report, 27.9 per cent of the organisation’s members have indicated that they are either already using online food delivery apps or intend to do so in the next 12 months.

Menulog has lower commissions but no drivers

Menulog has been operating for the longest in Canberra and has a different business model to the other players. It has a standard commission rate of 14 per cent but does not normally provide delivery services – leaving that to the restaurants themselves.

“Menulog has a unique business model in that we work with local restaurants to provide them with the technology, resource and support to help them facilitate their own deliveries, with their own drivers,” said a Menulog spokesperson.

“While we do offer some delivery solutions in select areas, we are a marketplace business, which means we connect the greatest number of local restaurants with the greatest number of local consumers to create an ever-growing ecosystem.”

The smaller commissions charged suit Mr Thapa who has signed up The Hungry Buddha to the service because he believes it provides value.

More than 150 other Canberra restaurants are also partnered with Menulog and the number is growing.

“We support all restaurants from family owned and operated, to more ‘trendy’ outlets, to major branded restaurant groups, such as Red Rooster and Crust,” the spokesperson said.

“We even recently sponsored the Sunset Cinema series in the botanic gardens to provide food deliveries to those enjoying an outdoor movie.”

Menulog recently provided food deliveries to people enjoying the Sunset Cinemas. Photo supplied.

Both Deliveroo and Uber Eats would not confirm charging commission rates as high as 35 per cent, saying that these rates are part of commercial agreements with individual restaurants and are confidential.

‘Deliveroo’ the most searched term on Google in Canberra in 2017

Deliveroo has operated in Canberra for around 10 months and said that order numbers have grown by 400 per cent in that time – with ‘Deliveroo’ last year being the most searched term on Google in Canberra.

A Deliveroo rider. Photo supplied.

A spokesperson for Deliveroo said that the service provides an additional revenue stream for restaurants leading to between 10 and 30 per cent growth.

“Restaurants have told us that using a delivery service like Deliveroo makes it a lot easier for them to get delivery orders to customers,” the spokesperson said.

“Restaurants working with us have also seen the partnership drive new customers to dine in their restaurant after having a great experience with the delivery.

“Working with Deliveroo has also shown to balance out what might be quieter nights for in-restaurant dining with income from delivery. For example, Sunday nights can traditionally be a quieter night for diners, but is the busiest night for delivery customers on Deliveroo.”

Uber Eats’ partner restaurants range from Macca’s to Grease Monkeys

Uber Eats opened in Canberra last July and said it delivers to residents from Woden to Gungahlin with new areas always opening up.

MacDonald’s is one of Uber Eats partner restaurants.

“We now have over 140 Canberran restaurants listed on our platform which range from McDonald’s to local favourites like Grease Monkeys,” said Uber Eats General Manager City Operations (Australia and New Zealand), Susan Anderson.

“Our app makes it easy and reliable to get the food you want, when you want it – whether you are at home, in the office or at the park,” she said.

“Our platform further aims to help local restaurant owners reinvigorate their businesses by reaching many more consumers. Uber Eats also allows them to innovate and experiment with new menu offerings that appeal to a different audience than those that dine in.”

All three online food delivery platforms operating in Canberra say they charge customers a flat fee of $5 for a delivery and they do not inflate the cost of the food – instead keeping the prices the same as for someone dining in the restaurant.

Are you a partner restaurant or do you use the online food delivery apps to order food? How have you found the experience? Let us know your thoughts in the comments below.

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What a great story. As a resident in Ainslie there are so many great restaurants close by. Before moving into Ainslie, nearly 20 years ago, I envisiged strolling into Civic and Braddon, two or three times a week, to sit in cafes and dine in restaurants. I can count on one hand the number of times I’ve walked into either of these places. Now with all these online food delivery services, it is even easier to access them – still think I’ll be getting in the car and driving there for some time to come.

I’m a Deliveroo rider and I reckon for the most part restaurants are happy. When I’m doing deliveries on a Friday night or weekend, most restaurants are already filled with people so they are increasing their business by being able to make extra money when the place is full. I am based in Civic but I frequently get jobs to places like Campbell, Lyneham and O’Connor. I doubt many of these people would make the trek into Civic, trying to find a park just for a meal so I reckon it isn’t just taking customers away.

All that being said, it is of course different for each restaurant. For some places, I’ve had the owner/manager tell me they don’t feel Deliveroo is worth it but this is a rarity. There are other restaurants where I wonder how they are still open as I rarely go to them to pickup food and when I do go, they are always empty.

Don’t forget Gym Meals Direct and Easy Life Meals Canberra, both meal prep and delivery services owned by the same company. GMD specialises in high protein meals for bodybuilders while Easy Life Meals offers more general meal options.

Andrew Sykes9:48 pm 21 Jan 18

A tough decision for restaurants to make. It can be worthwhile for the business as the wage cost of servicing a customer on premises tends to run anywhere between 30% to 40% or higher. However, if the business has a strong takeaway base then it can be a problem – if pick up and delivery are the same price, then it’s likely many customers will switch to delivery. This can be a very real cost to a small business. Ideally these services work for the business that has traditionally only sold meals to be eaten on the premises. In that case they can bring new customers and increased revenue.

Capital Retro6:29 pm 21 Jan 18

Do they have a state of the art media centre?

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