Deliveroo delivers ‘table service’

Australia’s food delivery wars are heating up, with providers slashing fees in a bid to help the restaurant industry survive.

Ed McManus is the Australian managing director of Deliveroo. Aaron Francis/The Australian

Australia’s food delivery services are rushing to help consumers and restaurants through COVID-19, with Deliveroo adding a ‘dine in’ option, dubbed Table Service, and joining others in slashing fees to help the local industry survive the pandemic.

Deliveroo boss Ed McManus told The Australian that his company would this week switch on new functionality, allowing restaurants to operate dine-in services safely and enabling thousands of Australians to return to restaurants.

He said using ‘table service’ users could browse a restaurant’s menu, order and pay at a restaurant via the Deliveroo app, and still maintain social distancing.

“We wanted to think about how we could use our technology in a way that there could be slightly less human-to-human contact,” he said. ”We don‘t know when a vaccine is coming, but we do know it’s going to be difficult and take some time to get back to normal.

“A really vibrant and successful dining industry is a huge part of our culture in Australia, and it is possible that some form of social distancing may remain in place for longer than we all hope.”

According to Mr McManus, orders placed through Table Service will be charged at 0 per cent commission to restaurants, aside from a 2 per cent service fee.

He added that the most recent lockdowns had been incredibly challenging for Australia‘s restaurants across the board.

“When I talk to restaurant owners, what they‘re saying is that it is tremendously difficult for them both financially in terms of their own businesses, and from a psychological point of view too,” he said.

A Deliveroo driver collects a food order from a re-opened Burger King restaurant. (Photo by Mark Trowbridge/Getty Images)

“It‘s very tough. And this all came at a time when the restaurant industry more broadly was already under pressure because of rising rents, thanks to a commercial property boom. Restaurants are telling us that in the past five to 10 years their margins have been compressed very considerably.”

It comes as Australia’s food delivery services argue that there’s a misconception around the fees they charge restaurants.

Mr McManus said of a $30 order for example ($30 order + $3 - $5 delivery fee), $21 would go to the restaurant, $10 - $11 to the rider and $1 - $3 to Deliveroo. He said Deliveroo uses this remaining amount to cover credit card fees, rider insurance and tech support.

Menulog’s local managing director Morten Belling said in a recent interview that businesses like his are facing challenging circumstances just like restaurants themselves. He said that a recent rebrand meant his business now had an opportunity to reposition itself in the market and connect more with customers.

“There’s a big misconception out there in the market overall that aggregators like us are printing money, ” he said. ”We are a marketplace business, working with restaurants, and if you look at the economics of it, it’s got to be sustainable. And we need these restaurants to be sustainable.

“COVID-19 has given us an opportunity and a responsibility to really step up our game, support regional communities in particular, and those who are struggling. There has been a big influx in restaurants wanting to work with us, and we want to continue those relationships over the long term.”

As The Australian recently reported, Uber cut the maximum rate it charges restaurants from 35 per cent to 30 per cent.

Meanwhile new food ordering platform entrant Mr Yum has this week launched a new directory, and slashed its fee for restaurants.

For restaurants affected by Melbourne’s Stage 4 lockdown, Mr Yum’s typical 4.5 per cent per order platform fee will be dropped to 2.9 per cent.

“Food ordering and delivery has always been seen as a spur of the moment experience. It’s been built with the customer in mind, but very little consideration on how hard it is for restaurants to manage and plan for,” Mr Yum CEO and co-founder Kim Teo said.