UJber eats delivery platforms

Restaurants struggle as delivery platforms eat into profits

November 21, 2019
By Alana House

Restaurants and Catering Australia (R&CA) says restaurants are finding it difficult to make ends meet as they deal with rising below-the-line costs and delivery platforms that “demand more than their fair share of the pie”.

As a result restaurants across the country will be forced to raise prices if they are to stay in business, with 58% of respondents to an industry survey saying they expect menu prices to increase in 2020.  

The findings are revealed in the 2019 annual Benchmarking Report, which includes these insights:

  • The cost of wages now averages 41% of total business costs, with more than 50% of total business costs relating to staff.
  • The most significant issue currently facing the industry is a perceived inability to raise prices, with 55% of respondents listing it as their most important issue.
  • While businesses have found it easier to fill key positions in the last 12 months, more than half still report some difficulty in filling skills gaps in their business, with the position of chef continuing to be the most difficult to fill.
  • More than 75% of business owners stating they fail to pay themselves the award rate for work they do in the business, with more than 50 per cent indicating that they do so significantly or regularly to make ends meet.
  • High and increasing prices, complexity of compliance requirements and lack of education are among the main reasons listed by respondents for non-compliance.
  • 53% of businesses found that while their revenue increased as a result of partnering with online delivery platforms, their profit decreased; while 55% felt that it is impossible to make a profit from delivery due to high fees.

UberEats was the most popular food delivery platform businesses used at 26.2%, followed by Menulog on 22.3% and Deliveroo on just 3.08%.

Menulog delivery platforms

R&CA’s CEO Wes Lambert said: “This year, we are seeing more restaurants struggle than ever before.  There are a number of rising and additional costs that consumers don’t consider which are putting extreme financial pressure on restaurant owners. 

“Food prices have soared as farmers combat the drought and costs such as rents, wages and utility prices continue to rise.  Finally, restaurant, cafe and catering businesses are left to contend with the hefty chunk delivery platforms take out of the profit.  It’s a battle that business owners are slowly losing.

“We encourage people to actually go to their favourite restaurants to either pick up their food or dine in rather than use a delivery platform.

“Convenience is obviously a strong driver for patrons, but it is important diners understand that restaurants will close if something doesn’t change soon.

“Our call to the Australian dining public is to be prepared for their local restaurant, cafe or caterer raising the prices of their meals to ensure they survive.

“These businesses cannot continue to pay the high commission forced on them by delivery platforms on top of rising costs across the board. Something has to give or businesses will be forced to close.”

The 2019 R&CA National Benchmark Report covers favoured bank and superannuation funds, business expectations, outdoor seating areas, business costs, skills and labour, digital technology, use of social and digital marketing channels and the importance of serving Australian wines.

Its findings come from the R&CA’s 2019 Industry Benchmarking Survey, which was distributed to more than 15,000 individual restaurant, cafe and catering business owners and senior managers across Australia.

Share the content

Related Posts