The Rise and Fall of Food-Delivery Services: Part II

Food delivery services are easily the leading startup growing in India. They’re having problems, like all startups are, but they bounce back with new funding and investments and changes in processes. But there’s always going to be something that is changing the way they are properly growing. Earlier this year, we talked about how food delivery services are either shutting down or getting acquired by other services every other day. We’ve gone from having over 100 of these food delivery platforms, to having 50 that are properly and fully functioning.

While all food delivery services might have the same concept, they’ve got something that separates them from the rest. Whether it be quick and easy ordering, or no minimum order limit or quick delivery, they’ve got something that makes them better than the other. But with the large number of these services, what do people do and who do they rely on the most?

These services are rising and falling and every other day, there’s something either great happening in terms of new funding or a growth in orders, or something bad, like restaurants pulling out and severing ties completely.

The Exit Strategy

Very recently, it was reported that restaurants in Bangalore are starting to cut ties with services like Swiggy, Shadowfax, TinyOwl and Runnr. And not for the reasons that you would think. The restaurants aren’t happy with a lot of things, starting with the 25% commission that these services charge the restaurant for delivering their food to the interested customers. Reading the reasons would make most people think that this is ridiculous, because lots of people who’ve never been to the restaurant would be ordering from there because they’re available on these services. But that’s also a problem for the restaurant, which is understandable. They might be making lots of food and making money off of the home orders, but the number of people that walk through their doors and sit down and enjoy a full meal reduces because of this.

All that aside, the other issues that the restaurants are facing is the delivery boys. A few simple reasons being that the boys are showing up late to pick up the order, which then makes the food get to the customer late, giving the restaurant a bad name. At the end of the day, the user tracking Swiggy or whoever on the app will see things one way, even if it’s happening another way. Another reason is that the delivery boys aren’t neatly dressed and their bags aren’t in great condition. To most customers, the issue that the food is late and the problems they are facing are not caused by the delivery service, but by the restaurant themselves.

The Plan B

Restaurants are now making the decision to have their own delivery services. Where they can control the way their delivery boys are dressed and how they conduct their business. Domino’s and KFC and McDonald’s have always had their own delivery services, but they’ve also tied up with these home delivery services because sometimes it’s easier. If you have more than 10 orders in a day and only 10 delivery boys, you can’t assure everyone that their food will reach them on time. So you can find a balance using these services. But it’s obviously still working better for the restaurant if they have their own delivery service, because it’s something they can control from start to finish.

Besides this, they won’t be paying a heavy commission to a service to delivery their food for them. And it’s not just fast-food restaurants that have tied up with these services. Restaurants that usually wouldn’t provide this kind of food on a daily basis can now reach a wider market. Without Swiggy or Roadrunnr, they might not even want to go in that direction, but they’d still do very well in terms of the kind of clientele that would come to their restaurant.

There really isn’t a special kind of method to fix this problem, because even if the delivery boys clean up their act, the commission won’t change. The food delivery services need to make money as well and while they can charge a much lower commission, it may not add much to their profits.