Over the last decade—and especially since the pandemic—the way in which consumers have their food delivered has changed dramatically. The traditional menu with the price list and a phone number for orders, the sort that used to get pushed under our doors, has gone, replaced by digital menus posted on one or more online platforms/applications created for that purpose. Offering restaurants and take-aways enhanced visibility and access to a wider customer base, these platforms were a lifeline for the industry during the disruptions caused by the coronavirus, while consumers also benefited from the convenience and abundant choices the new tool provided.
However, this updated service has come at a cost. Being present on delivery apps doesn’t come cheap, and the commissions the platforms charge turn them into something more like partners rather than a simple tool. In the early years, a store that wanted to be included on an app could expect to pay 8%. But now the cost for simply advertising the company’s catalog has risen to 12%; if a business also opts to deliver through its partners, the commission can reach a whopping 30% of the total order. “So if a store makes 1,000 euros in a night from orders placed through an app, it will have to pay 300 out of its turnover, meaning that costs can exceed 50% of net profit on Internet sales. Add to this the electricity charges and wages, the cost of raw materials, consumables and so on, and it’s easy to see that entrepreneurs have literally been brought to their knees,” the Press and Public Relations Secretary of the General Confederation of Greek Workers (GSEE), Dimitris Karageorgopoulos, told TA NEA.
The burden on the consumer
Naturally, part of that burden will be passed on to the consumer, who has to pay their share of both the expensive raw materials and the fees paid to the apps. In fact, depending on the agreement a given company has reached with the platform, the customer may be charged between 0.50 and 3.00 euros extra for the service, further increasing the burden on household budgets. “These companies keep on raising their fees and will not hesitate to exploit their position in their dealings with businesses. Every increase makes it more difficult for the entrepreneur to keep prices down. The environment is already volatile in terms of raw materials, where the prices of a great many products have risen, then risen again. But it’s important we don’t turn eating out and ordering food into a luxury. It has to remain affordable for families,” Giannis Daveronis, president of the Association of Restaurants and Related Businesses of Attica, explains.
Dual tariffs
In an attempt to absorb the shocks of increasing prices and platform charges, quite a few businesses now resort to dual tariffs, meaning they charge different prices for orders via the Internet and others made directly with them. So if someone opts to order in the more traditional way, they can avoid the surcharges and save money. “A lot of restaurant owners have dual tariffs. In which case, if the consumer picks up their own order, their bill will be 25–30% less than it would be on the platform,” Karageorgopoulos explains.
He notes that while the platforms can raise visibility and increase turnover, they have now “become a middle man in the previously unmediated relationship between businesses and their customers”. In the same spirit, George Kavvathas, president of the Hellenic Confederation of Professionals, Craftsmen, and Merchants (GSEBEE), points out that “the industry has pretty much handed itself over to the platforms.”
With the digitalization train moving at breakneck speed and given the convenience delivery apps provide in both product selection and payment methods, the analog road would seem to have closed for good for the majority of consumers, while those professionals who have not… complied are facing extinction. “During the pandemic, everyone became familiar with online services and they can no longer avoid them, or do not want to. Now that consumer habits have changed, it will be very difficult for businesses to stand up to the competition and go back to how it used to be,” the Press and Public Relations Secretary of the GSEE noted.
Giannis Daveronis compares the colossal growth experienced by delivery platforms with that experienced by supermarkets four decades ago and shopping malls a few years later, which resulted in the marginalization of neighborhood businesses: “In their efforts to keep their businesses competitive, colleagues have focused on these platforms and turned them into giants in the process. That’s how four or five supermarket chains grew so big in the past, too. There were still smaller neighborhood markets, but we eventually turned our backs on them because the bigger ones had better prices. But now that the big supermarkets no longer have local competition, the goods on their shelves are anything but competitively priced. We must take care not to repeat that mistake with our delivery services.”
Since the platforms are now a necessary evil and have infiltrated consumer culture, Karageorgopoulos suggests that stores should build their own digital apps through their associations. “That would give our industry professionals a powerful bargaining chip, allowing them to negotiate better terms and rates than the platforms will currently give them.”
