The Price of Survival: Is raising rates the only way out for food delivery?
In the preceding articles, we explained that “Winner-Takes-All” strategists like DoorDash, Thuisbezorgd, GrubHub and UberEats are fueling their company’s growth with venture capital to acquire market share at any cost. However, due to changing economic conditions, venture capital is drying up. This has forced these companies to turn to increasing profitability by raising platform costs. The problem with this strategy is that restaurants were already operating at a loss on take-away and delivery before these increases.
But why do restaurants stick with them? Despite their losses, many restaurants continue to use these services as it helps offset high fixed operating costs and increases their market share. On top of that, delivery and takeaway for food and beverages is a growing market, which makes it increasingly difficult to turn away from without missing out on a big potential customer base. However, as the volume of online orders grows year on year, it is likely that the losses of restaurant businesses will continue to increase as well if better alternatives aren’t found.
On the other side of the coin, this is also something the food delivery platforms need to tackle as they grow. South-Korean Woowa Brothers, the company behind Baedal Minjok, generated a revenue of 2 trillion Won in 2021, almost twice as much as the previous year as a result of the COVID-19 pandemic boosting demand for food delivery. However, the firm’s operating loss also skyrocketed, expanding by almost seven times to 75.7 billion Won during the same period.
Food delivery and takeaway is here to stay
Online food delivery worldwide is growing year on year. Since it’s here to stay, the economics need to make sense for everyone: customers, delivery platforms and restaurants. A win-win needs to be created, and at the speed at which online delivery is growing, this needs to happen fast.
It’s simple. If nothing changes, the cost of meal delivery will rise aggressively. Leading to restaurant and customer dissatisfaction. The entire economics of the situation are currently unsustainable.
What does the future hold for food delivery & takeaway?
For the industry to sustain itself in the long run, there needs to be a shift towards models that give restaurants more control over their operations. This means allowing restaurants to do business on their own terms. As it stands, the percentage increase in commission fees coupled with the growth of online orders sets the stage for either restaurants to abandon delivery services in the future, or for a massive increase in restaurant prices. These are not sustainable options for the industry, and as such, there needs to be a change in the way food delivery and take-away operate, to create a more equitable and sustainable system for all parties involved.
The Bistroo Solution
However, there’s also a move towards sustainable platform services facilitating online food ordering against lower fees that could usher in a change in the food delivery & takeaway industry. Bistroo operates essentially as a tool provider for restaurants, on a structure which gives the merchant more control over their online shop, while at the same time reducing overhead costs. This allows for a reduced cost basis in turn for the restaurant and shop operators.
- Full control over their shop (changes menus, products, stock, etc.)
- Direct payment to the restaurant
- 5% commission on all orders on the marketplace
- Flexibility; get a custom made webshop and/or website for a monthly flat fee
- A QR code solution in order to reduce dependency on waitstaff at the tables
- No upfront investment in hardware or hidden fees
Get your fill on everything Bistroo!
Bistroo is a peer-to-peer marketplace for food & beverages, powered by the BIST Token. Bistroo is a pioneer in the blockchain-based food industry, building protocols that empower the merchants in an ecosystem that also benefits the customers.
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