Friday , April 16 2021

Consumers want pills for food delivery, but high fees are eaten by restaurant owners

It's no secret that the business of delivering meals is on the rise in Canada. Hungry consumers ordered meals worth $ 4.3 billion in 2018 – $ 1 billion from those for meal delivery pills, such as Uber Eats, Foodora and SkipTheDishes.

This figure will again climb this year, according to the Ipsos Foods Monitor.

But Canadians' enthusiasm for fast and easy dinner is not shared with all restaurant operators, because shipping fees receive 20 to 30 percent commission from each sale.

"You're just wasting your time for great food for very little profit," says Thomson Tran, owner of the Kitchener-based timber company in Kitchener, Ont, which specializes in Vietnamese dishes. "I'm not a fan of delivery applications."

Restaurants Canada recently asked its members for a variety of industry issues, including the use of "third-party delivery / download applications".

Of those who answered, 35 per cent said they were working with delivery applications. The answers to the question about the profitability of the applications indicate that the majority of the respondents are not thrilled:

  • 55 percent said: "It's a little profitable."

  • 21% said: "Not at all profitable."

  • Less than 10 percent believe that the delivery of the application is "very profitable".

The delivery platform also does not climb.

Asked about the size of the Canada Food Canada food commission, the company's general manager defended the costs. "That's what we need to charge to make our business work for us, as well as for the restaurant," said David Albert. "We are actually working on very, very thin margins."

The Australian division of the German apartment fell last August due to financial problems. Meanwhile, Uber has warned investors that the company – and its Uber-eaten division – are losing money for a partnership with McDonald's and other big chains.

The delivery person of Uber Eats carries a meal to a customer. Delivery applications are popular with consumers, but are not very profitable. (PS)

Despite this, Tran seems to be the perfect candidate to jump on the trend of delivery: his restaurant has very little seating, and most customers opt for a download. Why not apply with a shipping application?

"My profit margin is so small that if I quit 30 percent of those third-party applications, that's the case," Tran says with his fingers hand. Approached three applications and rejected bids.

But some restaurants claim that the delivery of smartphones is a huge opportunity.

"Staff is already here"

John Lettieri runs the Hero Certified Burgers, an Ontario-based chain of 52 locations. He does not prefer to pay 30 per cent of deliveries delivery commissions.

"We have increased sales pretty much, without additional labor, without additional costs," he says. "The gas works, the electricity is running, the staff is already here."

Letzteri is so enthusiastic, he started a new venture: marketing his meals to unrelated food operators across the country, to sell them through mobile delivery applications.

John Letieri, founder and chairman of Hero Certified Burgers, shows new menu offers, which he intends to sell to other restaurants, just for delivery. (Mark Bochsler / PS)

"Now the idea is to send our product to existing restaurants where we are not present, where we will not break our own business, and we will prepare our products to go to the market."

Lettieri even adds new items from the menu – fried chicken, as well as fish and chips – to be sold under the Hero Certified brand, exclusively for delivery. "It's an opportunity to help independent restaurants develop their business, it's an opportunity to develop our own business," he explains.

Ghosts, but without dining

Some food business operators are building the entire business on the trend of delivering meals. They manage "spiritual kitchens" without a dining room. Best described as commercial kitchens, they exist only to fulfill orders from delivery applications.

George Cotos of Toronto is a Canadian ghost king in Canada. He leads the supplied kitchens in Edmonton, Calgary, Red Helen, Alta, Saskatoon, Winnipeg and Toronto and will soon open new ones in Ottawa, Vancouver and Montreal.

"I call real estate agents and I am asking them about the worst location in the city with the cheapest rent," says Kotos. "Because I do not need a store, because I do not open it to consumers."

George Kotos, an ambitious cuisine king in Canada, stands in front of his tablet bank, each linked to a different meal delivery platform, each offering a different type of food. (Mark Bochsler / PS)

He works with 14 restaurants that are only visible on a smartphone. For a hungry client, it looks like ordering from regular restaurants – but food comes from the kitchen where the chef prepares meals from a wide selection of menus: suckers, pizza, omelets, falafel.

Kotos says he works closely with Uber Eats to determine where he has potential for another of his spiritual kitchens.

The company shares data and analyzes with it about what kind of food is in demand, but is not available in a particular area. "So if you go to the suburbs and do not have an Indian restaurant, we can create a menu for them," he explains.

He acknowledges that the commission of 30 per cent is significant, but says it is fair, as applications make the whole marketing effort at the top of driver, vehicle and payment management.

"The majority of restaurants make it an addition to their business, and then whatever you do with delivery platforms, it's all a profit," he says.

Tran does not see it that way. Apart from financial considerations, the owner of the cookbook and restaurant has concerns about quality. "Consistency is a word that is heard in every kitchen around the world, but when you order food through a third application, you do not know who delivers it."

Tran has approached several times with applications for meal delivery, but he is not interested. (Keith Vilan / PS)

Tran says he is making efforts to create delicious, high-quality food and has little faith that the delivery application can guarantee that food will arrive hot and fresh, as it was meant to serve.

"From my experience as a consumer, at my door is up to two hours, to get to my door – cold, cool – and who takes the main problem? It is not the driver. It is the owner of the restaurant."

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