Food delivery here to stay
Within a year, UberEats has changed the food industry. Madison Reidy reports.
UberEats’ ‘‘aggressive’’ growth nationwide has encouraged hundreds more restaurants to sign up to delivery services, but it’s still too costly for many.
Ride-hailing app Uber’s meal delivery service launched in Auckland one year ago.
It has since grown from 70 restaurants to more than 400, launched in Wellington, Christchurch and Hamilton and increased its delivery hours to 4am in some cities.
Uber takes a 30 to 35 per cent cut from the price of every order delivered from a restaurant or cafe.
Restaurant Association of New Zealand chief executive Marisa Bidois said not all restaurant owners were in a financial position to sign up to the service.
The association had been trying to negotiate a lower rate for its members for months, she said. UberEats had not budged.
‘‘It is a costly exercise if you are sitting on a 5 per cent margin as a business owner in hospitality.’’
UberEats New Zealand country manager Emma Foley said the company was comfortable with its rate and would not lower it this year.
Last year some restaurants began pulling menu items from their listing on the app because they were not making enough money from the service.
Bidois said the growing popularity of online food delivery services meant restaurants needed to start using them or they would be left behind.
‘‘It seems to me like something that is here to stay.’’
Some owners had raised concerns that fewer customers were dining in at restaurants, she said.
Restaurant Madam Woo owner Josh Emett was one of the first to sign his restaurant chain onto UberEats last year.
He praised the service, saying it delivered food to more paying customers who were not taking up tables in-house.
‘‘We think it is a valuable revenue stream. It creates more customers.’’
Restaurants should only sign up to external delivery services if it did not impact their in-house operations, he said.
‘‘If at peak times, you are getting overloaded with orders and you cannot keep up with the volume inside your restaurant, then you have really got to ask yourself the question, ‘What is our business model and where does the importance lie?’’
Delivereasy director Nick Foster said UberEats’ rate was ‘‘right up there’’ and only high-end restaurants could absorb the cost because they charged more for their meals and received higher margins.
That had been a blessing in disguise for his competitive business.
‘‘Cheap, street eats that would struggle’’ with UberEats’ rate had signed onto his service that took 20 per cent from each order instead.
‘‘A lot of restaurants will not go with them [UberEats], because they will not make any money,’’ he said.
Some restaurants used more than one delivery company; however, UberEats’ ‘‘behaviour’’ did not allow many Auckland restaurants to use other services, he said.
MenuLog and Food Ninja were other competitors in the market. Foster said there was space for all of them to operate.
UberEats still dominated the Auckland market, but Delivereasy’s business had grown in Wellington where it started in 2016, he said.
‘‘We are just doing our thing, the industry is what it is.’’