By Kelly R
As reported by the Singapore Straits Times, more than 2,500 F&B businesses, as well as customers, have pleaded for food delivery platforms to lower commissions following the COVID-19 outbreak and the circuit breaker initiative, which has been extended to 1 June 2020.
F&B owners and customers have since come together and signed a petition on Change.org. This plea was initiated by #savefnbsg, a coalition of more than 600 restaurants formed by restaurateurs Loh Lik Peng of the Unlisted Collection and Beppe de Vito of the ilLido Group. Since the circuit breaker was enforced on 7 April, the enhanced social distancing measures meant that F&B outlets now can only offer takeouts and deliveries.
It is said that food delivery platforms have since taken advantage of the situation by charging exorbitant commission percentages on food deliveries — some reportedly as high as 35% per order — forcing F&B businesses to resort to discounting their food items to make them affordable for consumers. This practice has caused F&B businesses to suffer financially, unable to make much profit, if any.
In an open letter to the platforms, of which the main players are Deliveroo, Foodpanda and GrabFood, the petitioners say: “Nobody has ever liked the rates imposed on us but we tolerated them because, in the not-so-distant past, the money from your sales didn’t form a core pillar of our revenue streams. We watched in frustration as your commission increased steadily from 20 per cent to 30 percent.”
Restaurants reportedly make merely 50 cents net profit from every $25 sale — after deducting rent, salaries, cost of ingredients, packaging, utilities, marketing and delivery commissions. In the petition, F&B businesses also petitioned for the Singapore Government to mandate that delivery platforms should lower their commission by at least 15%; taking San Francisco as an example, who capped food delivery fees at 15%.
Besides the elevated commission rates by food delivery platforms, times are especially hard for F&B business owners as due to the export restrictions and lockdowns in other countries, suppliers have given feedback that it has become increasingly challenging for their imports to enter Singapore. Therefore, in addition to higher operation costs, F&B businesses are also facing a unique challenge in their supply chain disruption.
Tackling supply chain disruption and operational costs Ezy-ly
With EzyProcure, SGeBIZ has developed an online platform where food manufacturers and suppliers can source out and trade goods internationally, thus, widening the range of sources. This platform, which was to take 6-9 months to complete, is expected to go live in May 2020.
EzyProcure will be involving logistics company Alliance 21 to manage the freight forwarding and last-mile delivery aspects. Whereas, the cross-border transaction will be supported by United Overseas Bank (UOB). On top of that, this initiative will also be supported by the Infocomm Media Development Authority, Singapore Food Agency and Enterprise Singapore.
With EzyProcure, F&B business owners will also be able to apply for the Productivity Solutions Grant (PSG). As announced at Supplementary Budget 2020, the PSG will be enhanced to encourage enterprises to continue their digitalisation and productivity upgrading efforts. The maximum funding support level will be raised to 80% from 1 April 2020 to 31 December 2020. In addition to supply chain management, SGeBIZ also seeks to address the high commission fees that are charged by food delivery platforms. In their recent partnership with NinjaOS, F&B business owners who sign up for EzyProcure will be entitled to a year’s free subscription to NinjaOS. With NinjaOS, F&B businesses will be able to create their own apps for food deliveries. Through this, they no longer will have to pay high commission charges. NinjaOS will simply take care of the food deliveries for them. However, this offer is only limited to the first 125 sign-ups.
Click here to learn more about the COVID-19 relief initiative.