Dubai’s food outlets take on online food portals: Service charges of up to 35% on food deliveries 'way too high'

Dubai: Small and mid-sized F&B outlets in Dubai are planning to cut their ties with online food ordering and delivery portals, to bring attention to the current fee sharing arrangement.

These restaurants say these service charges are proving too heavy a burden on their shrinking cashflow.

The plan is for the restaurants and quick service outlets to stop taking any orders via these online portals - the likes of Zomato, Deliveroo, Uber Eats, etc. - for three days to show the seriousness of their intent.

The current service charges could be anywhere up to 35 per cent of the bill, they said.

And at this moment in time, F&B operators say, it is way too much. For getting an order booked through a portal, the service charge comes to 12.5-15 per cent. If the order requires delivery to be made as well, then it swells to 25-30 per cent.

“Restaurant owners, most having one to five outlets, want to make a point - there needs to be an immediate reduction in what these online F&B aggregators/portals charge,” said an industry source. “It needs to be a mutually beneficial relationship - the way it’s structured now, it’s not.

“All we are asking for is some readjustments to see through these tough times.”

Garnering support

Small F&B operators, numbering about 150, have been talking about the issues they are facing and what they need to survive beyond the COVID-19 pandemic. More F&B operators are joining these informal discussions. Each employing about 15 of so staff.

With strict rules in place on residents venturing out, the local F&B business is wholly dependent on third-party booking and delivery operators to fulfil any order. Currently, between 60-80 per cent of the orders are serviced through these third-party operators.

But at the same time, the volume of business transacted by the F&B outlets too have come down, especially since the crucial dinner-specific orders have dropped. Which means that shelling out 25-30 per cent off each bill takes a whole lot of cash out of the hands of F&B businesses.

Appeal directly

Some F&B operators are making appeals directly to residents to call in directly and omit the “middleman”.

‘Support your neighbourhood restaurant business - place your orders directly,’ says one flyer. ‘Let them save the huge commissions they pay the food aggregators’.

Another is even more direct - “They charge restaurants between 25-35 per cent comission for each order. We would rather pass the savings on to you. Save 30% plus no delivery fee when you order direct.”

But most prefer some sort of middle ground being reached and not let temperatures flare.

A bit of give and take

According to a spokesperson for the newly formed Middle East Restaurant Association M.E., “The delivery service providers are part of the food and beverage industry too. It is this service which is keeping some of the food operators hanging on through this challenging period.

“In such difficult times, we would urge and request that the delivery service providers unite with the industry and give their maximum support by capping their fees.

“All industry stakeholders should do their part by supporting where possible and implementing minimal rules and fees over this period. Together we can contribute to the revival of the sector.

“Everyone involved must be encouraged to make their contribution on the journey towards reviving the economy and businesses and the food and beverage industry play a crucial and key part.

“MERA as an entity looks forward to our role as an effective platform and voice for the industry; to share best practices, joint responsibilities and uniting the industry to enable it to come out stronger on the other side of the pandemic.”

Different rules

But small F&B operators say online F&B portals are only hearing the requests of the big restaurants and quick-service brands. “The rules will be different for a McDonald’s or KFC and something altogether for a single-location operator,” said an F&B operator.

“Plus, we have no control on the discounts these online portals offer - and the discounts will have to borne entirely by us.

“F&B sector needs the online portals for their survivability - but they also need us for their own survival. That’s the point that’s getting missed. Restaurants need to make that point clear.”