Hidden costs: Tough restaurant conditions prompt delivery warning – Sydney Morning Herald

0
382

Restaurants said they often get blamed for issues with food delivery even if it’s not their fault.

Mr Agi said customer refund requests take up time for the restaurant chain which turned over around $10 million last year.

He said Deliveroo is particularly difficult as refund requests are sent through to restaurants which are required to rebut the claims or it will be charged for the refund.

A spokesperson for Deliveroo denied its processes are difficult for business owners.

“When things go wrong with an order, we have a robust and transparent process to ensure we review and assess each claim, and provide a resolution that’s fair and reasonable to all,” a Deliveroo spokesperson said.

“Our restaurant partners are not responsible for compensating the customer on claims that are outside of their control. For instance, if the issue is linked to the delivery of the food, or an aspect of the order which is impacted by the delivery process.”

It’s tough all round — everyone is feeling it.

Steve Agi

Uber Eats said restaurants could contact the platform’s support system with any concerns around issues with delivery that happen after an order leaves the store.

“We also have automated and real-time systems in place to flag issues with orders placed through the app so we can follow up with the relevant restaurant or delivery partner to understand what has occurred,” a spokesperson said.

Tough decisions necessary

At the same time, insolvency practitioners warn companies must make tough decisions about whether to use these platforms, as margins in the hospitality sector are tightening.

“The question really is, are restaurants layering on further costs in order to service the delivery market?” Jirsch Sutherland partner Andrew Spring said.

Uber Eats delivers an order from Biggie Smalls to another hungry stay at home diner.

Uber Eats delivers an order from Biggie Smalls to another hungry stay at home diner.Credit:Kristoffer Paulsen

Mr Spring warned this week that restaurants are facing a potent cocktail of high rents, increased competition and labor costs. Brand differentiation and cost tracking is key to surviving in this environment, he said.

According to ASIC insolvency data, in the 2017-2018 financial year 952 food and accommodation services businesses went into external administration — an increase from 803 businesses the year before.

Loading

Between July 2018 and May 2019, 975 businesses in this sector have already called in the administrators.

The number of wind-up applications across the broader economy was up 26 per cent this past financial year to 3,794, according to analysis from Prushka Fast Debt Recovery.

Prushka chief Roger Mendelson warned these numbers indicate this increase is a sign of more general financial stress across business sectors.

“A spike like this is generally a sign of increasing financial stress in the sector and is not necessarily representative of the entire scope of insolvent businesses,” Mr Mendelson said.

Mr Spring said hospitality owners must “understand where they make their money – on profit, not just their sales”.

Over the past two years the commissions charged by food delivery platforms has been a key point of contention for small businesses. The startups have argued that it’s worth it for businesses because of order volumes.

Companies like Burger Love have seen significant online order volumes over the years and have been able to grow significantly over this time.

However, Mr Agi said it was tough across the whole food industry, with commercial rents also a pain point.

Most Viewed in Business

Loading

Source