Heat in the kitchen over delivery apps
Doordash enters crowded market worth $162m
New Zealand’s love affair with food delivery apps has blossomed since Covid-19 hit, adding more than $162 million to the economy each year — and that’s just through Uber Eats.
Kiwis have clicked on those colourful meal icons thousands of times a week to have food delivered — sometimes paying around 25 per cent more than if they had got the food themselves.
This month, Doordash entered the scene dominated by Uber Eats, Menulog and New Zealand-owned Delivereasy.
And with the ability to order food from a phone, it’s not surprising that more than 25 per cent of young people are regular users.
Ordering Uber Eats at lunchtime — with the resulting school-gate drop-off — became so common that some Auckland principals banned students from ordering food to school, citing safety concerns around having delivery drivers on school grounds.
A recent study by the New Zealand Institute of Economic Research found that Uber Eats generated more than 517 jobs, and paid $32m to drivers.
The study estimated food apps added around $59,000 to the 2019 revenue of the restaurants using them — about $19.6m in total. It also found about 26 per cent of the orders came from people who would not have usually chosen a restaurant meal.
One Auckland pizza shop worker spoken to by the Weekend Herald said the business was signed up to Uber Eats, Menulog and Delivereasy as well as running its own delivery service.
“Uber Eats is more expensive but we feel we have to be there. It is better for us if customers order through Menulog because we can use our own driver.
“It’s even better if they come in or order directly through us and have us deliver.”
Marisa Bidois, from the Restaurant Association, said despite the reported revenue gains, delivery apps were not a great moneymaker for restaurants. “The feeling among our members is that high commission rates, slow payments, price surges and driver errors are making it hard for them,” she said.
“Most of our members are not
seeing any profits from their delivery business but feel that there is currently no viable alternative.”
Bidois said most used the apps to raise awareness of their brand.
“Many members feel that if they are not able to offer this service to customers they will lose business,” she said.
Bidois said an increasing number were looking at delivering their own food and signing with apps that allowed them to use their own driver for a lower commission.
The Restaurant Association had worked with Menulog during Covid lockdowns on deals to help boost restaurants’ revenue.
But the situation for restaurants had worsened in recent months, with higher prices for all basics including oil, meat and vegetables.
Restaurants were still suffering from Covid-related staffing issues and losses but were reluctant to pass on ingredient price rises to customers.
The entrance of Doordash brought hope that increased competition would lower commission rates, Bidois said.
“We are seeing more choice in platforms and as a result we’d expect we may see further flexibility around commission rates, or different options available.”
Doordash arrived just weeks ago, delivering through Wellington but with plans to expand across New Zealand.
Rebecca Burrows, general manager of Doordash New Zealand and Australia, said the goal was to help small businesses rebound post-pandemic.
“There are some other players in the market but we do think New Zealand is underserved so us coming in will add another option,” she said.
Nelson-based Yummi was the only business to advertise that the app price was the same as in-store.
George Evans, from Yummi, said the lower commission of 10 per cent plus GST meant restaurants on the platform did not raise their prices.
“We tag businesses that offer instore prices,” he said.