Chef warns half of the businesses using Uber Eats and Deliveroo to sell their products 'aren't making ANY money' off the online orders
- Geoff Bannister of Dr Dough Doughnuts said the industry needs to change
- The delivery service takes a 30-35 per cent commission for every order
- He said the whole model needs to change for it to be a sustainable industry
While UberEats has been applauded for its ability to draw customers to new foods and flavours, some argue it is doing more harm than good for restaurateurs.
The delivery service takes a 30-35 per cent commission for every order they receive on the platform for restaurants in Australia.
One of the business owners who helped pioneer the platform's introduction to the Australian market now argues the business model 'has to give' to remain sustainable.
Geoff Bannister, the owner of Dr Dough Doughnuts, said more than half of the restaurants who offer their services on UberEats and rival service Deliveroo 'aren't making any profits' at all.
Geoff Bannister (pictured with his partner) owns Dr Dough Doughnuts - one of the first companies to embrace Uber Eats in Australia
The owner of Dr Dough Doughnuts (pictured is a selection of his products) claims the food delivery industry isn't viable for businesses and the model needs to change
'If someone's taking 30 to 35 per cent of your margin it doesn't make sense at all, unless you've got a clear strategy for how you're going to parlay that into real customers who will walk through your doors,' he told news.com.au.
'I just believe the whole model needs to change. There's got to be a tipping point.'
He said while the service introduces new customers to businesses, it does little good when they're still not increasing profits.
In fact, he said the industry, if anything, has helped push customers away from visiting restaurants, due to the convenience of now getting items delivered to the door for a small delivery fee.
He said the industry has helped push customers away from visiting restaurants, due to the convenience of now getting items delivered to the door for a small delivery fee (pictured: an empty diner)
Dr Dough initially launched under a delivery-only business model.
While this is still the case, Mr Bannister said he only makes about 15 per cent of the sales on Uber Eats in comparison to those he made in their inaugural year.
But he puts this down to business development and a keen eye for expansion.
'Anyone partnering with UberEats or Deliveroo, you really need to know your numbers and what it's costing you to build and make any of your products, because the biggest thing is that in particular with UberEats you cannot price any higher than your in-store prices,' he said.
'Whenever I launch a new product or if my wholesale costs go up, I look at it and say, 'Is it worth selling through delivery?' And if it's not we don't sell it. You need to be really cautious of that, because everyone knows margins in the food industry are tight as they are.'
In addition to businesses not making profits, Mr Bannister said another 30 per cent are 'dangerously reliant' on the delivery service to keep their doors open at all.
He worries that if the delivery service industry sinks - as Foodora did in 2018 - there will be businesses across the country that are forced to close their doors as well.
UberEats is still a relatively new service and allows customers to get food delivered to their door (pictured) but the harms outweigh the positives according to some in the industry
