As Singapore continues to battle with Covid-19 and the impact it has dealt on our economy, another war seems to be brewing within the F&B industry.
In a bid to survive the plunge in walk-in sales from the dining-in ban, F&B businesses have turned to food delivery apps to boost their revenue.
However, this presented another challenge to them as they struggle to afford the steep commission fees charged by various food delivery platforms which come in at around 30 per cent.
Over the past few weeks, many F&B merchants have gathered to rally for governmental support in lowering commission rates charged by F&B delivery apps.
“While the government encourages takeaway and delivery options, commissions of 30 percent charged by delivery firms such as Grab and Deliveroo are too prohibitive for restaurants already operating on thin margins. We ask for help in negotiating lower rates to make delivery options financially viable for us,” the appeal letter reads.
Since food delivery apps take a cut from F&B merchants at around 30 per cent on all orders, this works out to $1.50 commission fee for a $5 order.
A No-Fee Alternative For F&B Merchants
On-demand delivery platform Lalamove said that they have always had a pro-F&B merchant solution — they do not take a single cent from merchants.
Commission fees have never been a part of our business model. Our focus has always been on refining our delivery systems and processes, in order to ease our clients and customers into a new digital normal.– Alex Lin, Managing Director of Lalamove
Lalamove allows merchants to opt for a multi-stop function that combines orders and delivery routes, in order to optimise the job of each driver and significantly lessen the burden on logistical costs.
“The merchant or user may add up to 20 drop-off points in a delivery order. The route would be optimised so that each subsequent drop-off point will cost only marginally more,” he explained.
In Singapore, there are up to 30,000 drivers on the Lalamove platform.
Lalamove Has Seen A Threefold Increase In Orders
Since the start of the circuit breaker, Lalamove has seen the number of merchant partners on the platform doubled, with the majority hailing from the F&B industry.
Drivers across all of Lalamove’s fleets and the total number of orders have both escalated at least threefold.
Before the circuit breaker, food deliveries comprised around 8 per cent of the business. The number has since climbed to 13-15 per cent.– Alex Lin, Managing Director of Lalamove
The increase in demand for food delivery is mainly due to social distancing measures and the dining-in ban, which may only be lifted after circuit breaker ends on June 1.
Their no-fee model for F&B merchants is attractive and even after the circuit breaker ends, Lalamove may continue to be an alternative to other delivery apps as they already have a huge fleet of 30,000 drivers on the platform.
Featured Image Credit: Tokyo Cheapo / Lalamove