“There is no question, those rates are going to go up,” said Mark Smith, managing director at Pho, on the commission charged by delivery companies like Deliveroo and UberEats.
Speaking about the challenges and opportunities posed by the delivery market at the Casual Dining Show, he said that while operators may not be happy with the rates they are currently paying, there could be worse to come.
“Deliveroo and UberEats are still loss making businesses. There isn’t enough money in this for all of us at the moment, so their rates are going to go up, and that is a huge risk,” said Smith.
The evolution of Deliveroo’s Dark Kitchens concept was also something we warned operators to keep an eye on. “It is quite clear these are not working for them,” with some operators dropping out, he said. “So what you have got now are the likes of Deliveroo considering, and I know that they will deny it, but they are looking at becoming operators in their own right. So they would start to become a competitor of ours as well,” he said.
With the logistics already in place, and the wealth of valuable customer data they hold, Smith said it would be “common sense” for them to want to take one party out of the equation.
But despite the risks, Smith said he was not against the delivery market in principle. “We have to embrace the growth opportunities we have got,” he said.
The delivery market has opened up a new audience of people that would otherwise by buying their food from the supermarket. While there has been some cannibalisation of the eating out market, there has been a bigger impact on the multiple retailers, with offers such as ‘dine in for £10’ seeing a reduction in popularity, he said.
The typical delivery customer is also “less price sensitive” he said, therefore he raised the potential for operators to a “charge a little bit more” for their delivery offer.
“There may be a lot of moaning, but as operators we have to ask - could we do it better ourselves?” and the chances are you wouldn’t be able to, he said. “Can I go and create my own Pho app and get customers to come to me? No, I can’t. Can I provide the drivers and the logistics and do it myself? No, I can’t,” he said.
While operators can’t hide from the margin issues Smith said it is a changing business model “and we have got to grew and learn as operators how we can adapt to that model”.
