Bangkok’s food delivery services to reduce their margins during June

[Jonathan Fairfield]

 

App-based food delivery services have agreed to cut their gross profit share (GP), normally charged to eateries at 30-35%percent, to 25%, while eateries also agreed to lower food prices by as much as 60% during June, in Bangkok and its suburbs.

 

The agreement to lower GP share and food prices was reached at a meeting, held earlier this week, between representatives of Grab, Gojek, Lineman, Foodpanda and Robinhood, eateries in Bangkok and its peripherals, financial institutions and Deputy Prime Minister and Commerce Minister Jurin Laksanavisit.

 

All, except Robinhood, have been charging eateries using their service to promote sales, after dine-in services were restricted to contain the spread of COVID-19.

 

Full story: https://www.thaipbsworld.com/bangkoks-food-delivery-services-to-reduce-their-margins-during-june/

 

-- © Copyright Thai PBS 2021-05-30

 

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[Pedrogaz]

Some bankruptcies in the offing????

[RafPinto]

They charge crazy rates.

Much more smaller restaurants would use them if they just would charge delivery charges and let's say 15-20Baht on top.

How can a small shop who sell food for 50baht survive, using their services which charge in excess of 30%.

 

All those delivery companies have little expenses. The drivers probably earn peanuts.

[ukrules]

Only Bangkok, the scam continues elsewhere in the country.

[mrfill]

4 hours ago, RafPinto said:

They charge crazy rates.

Much more smaller restaurants would use them if they just would charge delivery charges and let's say 15-20Baht on top.

How can a small shop who sell food for 50baht survive, using their services which charge in excess of 30%.

 

All those delivery companies have little expenses. The drivers probably earn peanuts.

Why should the small shop lose? They still charge 50Bt, it is the end user that ends up paying the 30% (15Bt on 50Bt) and if they don't like it, they can walk to the place and get it without surcharge. Its only an idleness tax.

[kevin612]

5 hours ago, mrfill said:

Why should the small shop lose? They still charge 50Bt, it is the end user that ends up paying the 30% (15Bt on 50Bt) and if they don't like it, they can walk to the place and get it without surcharge. Its only an idleness tax.

I agree, customer pays extra money for those deliveries.

[Walker88]

11 hours ago, mrfill said:

Why should the small shop lose? They still charge 50Bt, it is the end user that ends up paying the 30% (15Bt on 50Bt) and if they don't like it, they can walk to the place and get it without surcharge. Its only an idleness tax.

"Restaurants lose on every delivery sale....but make up for it in volume". A take on the old saw.

 

Not sure you understand how these services work.  The services receive the funds from the customer, take out 30% for themselves, then give the remaining 70% to the restaurant. Restaurants use the services because it does expand the customer base, and those customers might one day actually go to the restaurant, so then the shop would get 100%.

 

Margins are so slim in the food business that the 30% taken by the services usually puts the restaurant at a loss. Yes, some raise prices on the delivery service menu, but even there the services limit the % a shop can raise its price vs the shop's dine-in menu or previously listed delivery service menu. By the time most shops realize they are actually losing money when the services take their 30% cut, the services then prohibit the shop from instituting price hikes.

 

Rent, VAT, electricity, water, staff salaries, insurance, supplier costs, etc., plus the 30% the services take, leaves the majority of restaurants at a loss. Take away alcohol sales and 'majority' becomes 'almost everybody'. The consumer won't accept price hikes, either, so most restaurants in Thailand are now operating at a loss. There's a reason so many have closed. The rates charged by the delivery services just make matters worse.

 

Yes, nobody need use a delivery service. Over time---given the bad environment due to Covid and the fact shops only slowly realizing they are losing---many will abandon the delivery services.

[hotchilli]

17 hours ago, ukrules said:

Only Bangkok, the scam continues elsewhere in the country.

End price to the customer dictates if they want it or not.

[RafPinto]

16 hours ago, mrfill said:

Why should the small shop lose? They still charge 50Bt, it is the end user that ends up paying the 30% (15Bt on 50Bt) and if they don't like it, they can walk to the place and get it without surcharge. Its only an idleness tax.

Don't think so.

They charge a delivery fee on top but charge the restaurant 30-35% of the sale price.

That would be 50Baht less 30-35%. For most restaurants it is not worse the hassle because their margin doesn't cover the surcharge.

[josephbloggs]

On 5/30/2021 at 5:40 PM, mrfill said:

Why should the small shop lose? They still charge 50Bt, it is the end user that ends up paying the 30% (15Bt on 50Bt) and if they don't like it, they can walk to the place and get it without surcharge. Its only an idleness tax.

The 30% comes out of the listed restaurant price.

If it is 50 baht, Foodpanda (for example) take the 50 baht and pay the small shop 35 baht.  So the shop does clearly lose out.  And the small shop has to wait for their payment so it hurts their liquidity (FP collect the money from the end user).

Idleness tax.  Nonsense.

I have a friend who has a very small restaurant with very reasonable prices.  He sells on FP only to try to increase his customer base but he makes no margin as they take 30%.

 

Hopefully Robin Hood will be a success and be a little more fair.