Covid-19: Can GrabFood, FoodPanda lower delivery charges?

By Xavier Kong

AS much as food delivery services are helping to offset the ban on dining-in during the Movement Control Order (MCO), what about the places that are not covered by GrabFood and FoodPanda? What about delivery charges and overhead costs for restaurants?

Food delivery partners remain on duty throughout the MCO (thank you for your service!), and are invaluable to those who are unable to cook at home and unable to move about at this time.

Still, eateries have definitely taken a hit to their businesses, with Datuk Jawahar Ali, president of the Malaysian Muslim Restaurant Owners Association (PRESMA), sharing that business has dropped by up to 70% for its members, even as the eateries comply with the regulations of the MCO.

Jawahar also shared that food deliveries, takeaways and drive-through sales are not enough to offset the drop in business from not being able to accept walk-in customers, and lamented that the MCO is necessary, though he understands why it is so.

“We have even removed our chairs, to deter people who order a drink while waiting for their takeaway. Some regular customers even message our restaurants, inform them of the order as well as the number plate of their car, and do something similar to a drive-through,” Jawahar told FocusM, adding that members are also complying in providing hand sanitisers.

However, this may not be enough for the eateries to survive. A local food chain CEO told FocusM that margins are thin for a large number of small to medium food and beverage (F&B) businesses that serve as a multiplier to the Malaysian economy. He said he would not be surprised if some of our favourite places are forced to close permanently by the end of the MCO.

“Margins are thin for F&B, especially after taking overhead like rental, utilities and staff salaries into account. The 6% from the Sales and Services Tax on top of, at best, 20% margin is a heavy weight,” he says.

The local food chain CEO also shared that food delivery services such as GrabFood and FoodPanda are currently maintaining their charge of “20% to 30% off the topline,” which does not include the delivery charges. He further called for GrabFood and FoodPanda to step up and to deliver food to consumers at a reasonable price.

“People forget that food services and restaurants are a huge multiplier for the economy, and the repercussions should these businesses go under would be unimaginable,” he said.

Jawahar agreed that the member restaurants of PRESMA are looking at a 30% charge from the two food delivery services as well.

“Hopefully they can consider reducing the charges. Maybe to about 20%. We are trying to meet with them like we met with JPM to discuss this,” shared Jawahar, adding that it would help if banks could hold payment requirements for the next six months to allow restaurants to recover.

Grab riders approached by FocusM have shared that there has been an increase in orders taken. When contacted, Grab responded that the company is working on different options so that each part of the Grab ecosystem will be taken care of to the best of their ability.

Still, Jawahar and the aforementioned CEO are in agreement that times are tough on eateries, with Jawahar noting that soon, paying their employees might become a problem. The question of what the government is doing in this scenario is raised as well, with the aforementioned CEO noting that restaurants and eateries should enjoy similar assistance to hotels and other portions of the hospitality and tourism sector, while pointing out that eateries form a part of that as well.

“The smaller guys on the street are part of the big picture as well. What is used to keep one big guy afloat could be used to save so many more of the small guys, which in turn could potentially save even more jobs,” he said.

In the meantime, some eateries have a tough decision to make, which is whether or not they will be paying their rent for the coming month, or paying their workers instead. The aforementioned CEO noted that this is a “no-brainer,” adding that the choice is clear. – March 19, 2020

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Covid-19: Essential financial services to continue operating

Covid-19: Five chief ministers not invited for PM’s special meeting

Covid-19: Interstate travel restriction reinstated

Covid-19: Implications of MCO on deals and companies

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