title figure from the visual China, the original title, “boycott businesses, the introduction of limit orders: Takeout high pumping into the world behind the troubled” by: McCurry, Edit: Xu Wei
A few days ago, from the United States, the United Kingdom, Denmark and other countries, many top Michelin restaurants reported bankruptcy and closed the door, causing overseas catering people to cry out: “our industry is on the verge of collapse.”
Under the global epidemic, food and beverage businesses are on the verge of life and death, and takeaways have become a life-saving straw for businesses to maintain their livelihoods.
But behind the surge in orders from takeaway giants such as DoorDash, Uber Eats, Postmates and GrubHub, the crisis of merchants has not really been saved. The great success of the takeaway platform has made overseas catering practitioners who have broken arms dine-in and take-away takeaways complain.
So, the merchants took to the streets and shouted for a price limit order that came into effect immediately: During the emergency period, the cost of third-party service organizations providing food delivery was capped at 15%.
The government has launched, and the conflict between the merchants and the platform has eased, but is the “money-robbing game” over?
U.S. Merchants’ Victory
Jensen Dickon never imagined that one day he would take to the streets for demonstrations because he boycotted the takeaway platform.
Jason Deakin is the owner of two Spudz-N-Stuff restaurants in Evansville, Indiana, USA. Recently, he appealed to customers online: customers who want to order please contact the restaurant directly, not through takeaway Place an order on the platform.
“A list of $10,788.02, only $5918.06 in the end.” Jensen Dickon was very angry when he saw the bill, the money received from outside order customers, the commission deducted by the takeaway platform and other fees It’s more than 40%. This ratio is too high. He believes that the business of the merchants under the epidemic will not be easy. “If the customer orders directly in the store, I can earn at least $3,000.”
Coincidentally, the owner of the Chicago Pizza Boss fast food truck also tweeted that GrubHub was stealing his cash flow.
He issued 46 prepaid orders worth 104104.63 US dollars, including 42 GrubHub takeaway services and 4 user orders. In the end, however, only $376.54 in his pocket, barely covering the cost of food. In the meantime, GrubHub charged 20% market commission, 10% food delivery fee, 3.05% handling fee and promotion fee. To put it bluntly, it is to lose money and shout.
During the epidemic on the US takeaway platform, the high sales rate angered businesses
The takeaway platform committed public anger, and the restaurant owners took to the streets.
Since April, the four major US takeaway platforms have been subject to antitrust class action lawsuits, pointing directly at the 10% to 40% of the fees charged by their monopoly. Many restaurants on social media urge users to delete these takeaway platforms and place orders directly on the restaurant’s official website.
Unity is strength. The catering industry continues to exert pressure on the government and finally achieves results. A few days ago, the New York City Council voted that during a state of emergency, the cost of third-party service organizations providing food and beverage delivery is capped at 15%. The law was signed and entered into force by New York Mayor Bai Sihao.
For takeaway platforms, this is the ceiling. For restaurant owners, this is a peace of mind.
After the government takes action, it can at least postpone the takeout of the food delivery platform and keep the catering industry alive.
In addition, the New York State government also stipulates that other types of charges other than takeaways have a maximum charge of 5%. Even after the statutory emergency is over, the commission cap policy for the catering takeout industry will be extended by 90 days.
After the introduction of the price limit order, the game of grabbing money from the takeaway platform is over. If you continue to draw high, the takeaway platform will pay a fine of $1,000 per day for each illegal case.
In fact, New York is not the first city to implement a price limit order.
Prior to this, the City of Chicago had long begun to rectify the opaque food delivery costs, and requested delivery platforms to provide detailed receipts including (meal costs, taxes, and takeaway fees , Commissions, service fees, etc.) Those who violate the regulations will be fined between US$500 and US$10,000 per day.
The action was supported by the Illinois Restaurant Association. The City of Chicago said the move was designed to allow users to make comparisons according to their needs and choose the most suitable food delivery platform, thus leaving more revenue to restaurants than food delivery platforms.
With New York taking over, San Francisco, Seattle, Washington DC, and Jersey City are also racing to announce price limit orders. It should be said that an action to say “no” to the takeaway platform is ongoing.
Incredibly “money-robbing game”
Perhaps it was the epidemic that gave the delivery platform the best time to make a profit quickly.
On the one hand, they recruited takeaways on a large scale, and on the other hand, they were preparing for capital. Foreign media reported that Uber is preparing to acquire US food delivery giant GrubHub for $6.3 billion, although the two parties have not signed an agreement. But they all seem to need to do this business.
The epidemic has severely damaged Uber’s online car-hailing business, so it hopes Uber Eats will complete its profit target delayed to 2021. And GrubHub also hopes to use Uber to join forces to complete the monopoly of the takeaway market.
GrubHub’s market share is 24%, and Uber Eats accounts for 32%. Once the acquisition is completed, they will defeat Doordash, which accounts for 35% of the leader, and take about 56% of the takeaway market, becoming the largest takeaway platform in the United States. The control and monopoly of a single company is likely to force the restaurant to surrender the bargaining power, and also make the user lose the right to choose.
Uber Eats canceled the takeaway service in some regions and countries after the price limit order came
Originally, during the epidemic, the takeaway platform hoped to increase profitability by holding high. But the price limit order came, and the takeaway platform suffered a great deal. In this regard, the Uber Eats business told customers in an email that it would terminate its service near Treasure Island in the city.
Uber Eats Vice President Pierre Dimitrigor Coty still told the media that he insisted that the company must improve profitability. For eight countries that do not dominate, Uber Eats also canceled the takeaway service.
In contrast, GrubHub’s performance is more moderate. Matt Maroni, CEO of GrubHub, said: Although the company has a large input cost, there is no loss.
The revenue after deducting expenses for this quarter is expected to be US$5 million, a 90% decrease from the same period last year. In this case, GrubHub is doing everything it can to help the restaurant, because in the final analysis, whether the restaurant can make money is extremely important to us.
However, from the perspective of advertising investment, these takeaway platforms still hope to complete the crazy pull and drainage during the epidemic. According to Kantar, GrubHub’s advertising expenditures in the United States were US$27 million between February 2 and April 27 this year, a 40% increase from the same period last year. DoorDash increased ad spend by 35%, and Postmates increased ad spend by 82%.
They are fighting for customers and restaurants. But the restaurant owners have different attitudes.
In London, England, a restaurant owner complained that “If Deliveroo takes 42%, how can we make money? It’s the takeaway platform that makes the money, not us.”
This also reflects the voices of some restaurant owners. In their view, the take-out platform to provide commissions to delivery staff, to collect high marketing fees to attract customers and other routines does not work. And the takeaway platform as an intermediary, robbed the restaurant of cash flow. The restaurant has to pay for rent, utilities, and labor.
CheesecakeFactory, DineBrandsGlobal (Chipotle and Applebee’s parent company) and other restaurant chains are investing in self-service takeaways. Steve Joyce, CEO of Dine Brands, believes that “obviously, it is in our interests to directly connect with customers.”
Similarly, traditional dine-in ordering service companies such as Tock have also begun to provide takeaway services for restaurants, and their commissions are lower than traditional takeaway platforms.
Global troubles behind high draws
In fact, the success of the takeaway platform is not due to the outbreak, but a long-standing global problem.
First of all, the epidemic has increased the number of customers who order take-out, and their demand is directly converted into restaurant orders. This brings benefits to restaurants on the one hand, and it can also make up for the loss of dine-in.
But the restaurant owners are not happy because the takeaway platform has compressed their profit margins. Therefore, they need a price limit order to protect the interests of restaurants.
In contrast, the takeaway platform also faces some uncertainties. In a special period, it is not possible to quickly estimate how many customers will insist on ordering takeaway.
According to the data from the takeaway platform, although the sales volume is indeed growing, the safety equipment provided by the takeaway platform in response to the epidemic has also increased the capital cost. Will be reflected in the financial report.
Not only in the United States, in many countries, high-volume Chengdu has always been a contradiction between takeaway platforms and merchants.
In August last year, in India, because of dissatisfaction with the high commissions charged by takeout apps such as Zomato and Uber Eats, Indian restaurant owners launched a protest on Twitter to exit the takeaway platform.
During the epidemic, the founder of a well-known restaurant in Malaysia also said that 100% of takeaway income during the period of the action restriction order, but the better the takeaway business, the smaller the profit. Because the takeaway platform has a 30% commission, has the founder applied to Grab to reduce the commission rate during a special period? Finally rejected by the platform.
Similarly in China, the contradiction between the merchants and the takeaway platform has always been an intractable problem. There have been merchants who have been discouraged from landing on the takeaway platform because they feel that excessively high payouts will cause a burden on operations.
At present, many countriesHome, although catering is gradually recovering, retaliatory consumption still needs to wait and see and wait. Therefore, pragmatic restaurants have chosen to walk on two legs, dine-in and take-out.
For dine-in food, if you don’t have a business, you can only rely on take-out, but the take-out platform can’t get around a 25% commission, making restaurants equally profitable.
In order to save the catering industry, some local officials personally went to the restaurant to dine in the restaurant, and set an example. Some local catering associations directly sent letters to the takeout platform to negotiate with them about high commissions and monopoly operations to protect the rights of catering businesses.
For this reason, takeaway platforms also have their own hardships, saying that during the epidemic, about 25% of the commission is indeed higher than usual, because the platform itself costs maintenance, the rider has to pay, and the salary has to rise during the epidemic.
How to solve the problems of takeaway platforms, catering industry and customers, and introduce a competition mechanism may be a good choice.
There are more food delivery platforms, competition will refine the service and free rider mobility; restaurants can also have bargaining power to preserve the dignity and dignity of survival; customers can also have more choices and enjoy cost-effective services.
Perhaps with the emergence of more spoilers, it will allow the market to compete fairly and orderly, allowing food delivery platforms, restaurants, and customers to maintain their own interests under the new pattern.