Careem model opens up options for restaurants
Company stops taking a percentage and introduces a zerocommission model
Such changes are great for the industry as a whole. The food delivery space is just at its early stages and witnessed impressive progress over the past two years.”
Gheed El Makkaoui | Head, food operations at Careem
Flexibility on payments — that was another lesson individuals and businesses learnt well from the pandemic year. Whether it was more time to pay off a bank loan or rent, or credit owed to suppliers, 2020 was about making some sort of adjustments.
Some of that has filtered into the local F&B space, with restaurant operators given more flexibility from order-and-delivery platforms on commissions.
Which is much better than the flat 25-30 per cent commissions that F&B businesses had to shell out on each order received and delivered last year, and which became such a sticky issue for the trade.
Some of the credit for altering the status quo goes to Careem, the ride-hailing company that later ventured into the food delivery space as well. It was Careem that, among the major service providers, dropped the commission structure for a more freewheeling arrangement with F&B businesses from February last. “Careem was taking a commission of any sale of around 25 per cent,” said Gheed El Makkaoui, who heads the food operations at the company.
“The industry benchmark is somewhere between 25-30 per cent. Careem stopped taking a percentage commission and introduced a zero-commission model.”
In with the new
The new version gives restaurants the option to choose between a fixed monthly fee, a fee for the processing of all digital payments, or the actual cost of delivery minus what the customer has already paid is charged to the restaurant.
But what did all these options mean for a restaurant in terms of savings on delivery commissions? “For smallvalue orders, restaurants will keep about 5 per cent more of the value,” said El Makkaoui. “For larger orders, the difference grows dramatically with restaurants keeping over 17 per cent more by switching.
“Depending on the size of the business and the volume of orders, the merchant can choose from 4 bundles that suit their business needs. That way the partner pays a fixed monthly fee that doesn’t change with the increment of orders, giving restaurants more control and the ability to do better financial planning.”
Pressure on other ‘food aggregators’
According to F&B businesses, since Careem — and noon — brought in changes to their commissions, other order-anddelivery service providers — or ‘food aggregators’ in industry lingo — have gone on the same route.
“We cannot comment about other aggregator strategies — however, we have seen several players move towards more flexible commission models,” said El Makkaoui. “Such changes are great for the industry as a whole. The food delivery space is just at its early stages and witnessed impressive progress over the past two years.”