Restaurants as hostages of distribution companies. It has been heard more and more often for more than a month in public space.
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It all started challenge An association of small and medium-sized enterprises, which turned to representatives of food and distribution companies to help gastronomes and share their current margins with them. Commissions of up to 30 percent of delivery did not seem appropriate to them in the current situation.
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The biggest domestic player – the Dame Food company, has been silent so far. But now she has decided to comment on the situation. However, the expectations of gastronomes in the form of a reduction in margins, like its competitors, cannot be met.
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Delivery is loss-making
“If I could and would be a company that makes big profits, has very variable costs and we really have space to order, I would like to share with restaurants, especially in this situation. But if we were forced to reach into this 30 percent, I would be left alive and I would turn into losses of tens of millions very quickly. In the end, it would turn out that we would have big problems and we could end up very quickly, “said Filip Fingl, the head of the Dame Food company, in an interview for the Business News List.
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We’ll give food
The company was established in August 2012 by Tomáš Čupr.
In 2014, it became part of the German group Delivery Hero.
Since 2019, Delivery Hero SE has been the sole owner.
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The distribution companies agree that the subject of their business is loss-making as a result, and behind the 30 percent margin there are a number of “invisible” items at first glance.
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What does the price for imported food consist of?
It needs a conceptual change
In 2019, the Dame Food company earned almost 412.5 million crowns in the Czech Republic, a year-on-year increase of 45 to 50 percent. At the end of last year, however, the profit was minus 62.5 million crowns. And that is why the company defends the reduction of margins and considers it unconceptual.
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“This is one of the businesses with the lowest margins in the world, we do not have the reserves to be able to share with restaurants in the current situation. We noticed any challenge to reduce the margin through the media. No one communicated with me, no one addressed me. In the spring, we offered strategic and media cooperation to the Association of Restaurateurs, but in the end we agreed that it didn’t make sense. We were very sorry, because I think we are very open in this, “adds Filip Fingl.
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The deliveries fell asleep
However, in response to the call of the Association of Small and Medium-Sized Enterprises, meal vouchers, which operate on a completely different business model, responded to the reduction of margins in a matter of days. A similar approach to the discussion was expected by Luboš Kastner from the Association of Small and Medium-Sized Enterprises.
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“Distribution companies are heavily invested start-ups, but the speed and structure of the response completely overtook them. The distribution companies are silent and have done nothing themselves. I did not receive any email or meeting request. Which I translate to the fact that they didn’t want to do anything with our challenge, they don’t want to help the gastronomy. If this is not the case, we are, of course, ready to negotiate their proposals and help in the same way as we did with food stamp companies, “Kastner told the News List.
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None of the distribution companies operating in the Czech Republic has yet agreed to reduce margins. However, most offered at least marketing support for restaurants or a subsidy for a delivery fee, all with the same goal: to increase the number of orders.
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Pohlreich also began to deliver with Liftage
New platforms have also emerged. The company Storyous in cooperation with Zdeněk Pohlreich and Liftag launched OneMenu.cz, where people can order food and for restaurants the price of delivery is fixed. The restorers themselves can then determine what part of the cost of this fixed amount will be transferred to the customer and what they will pay. This gives them space, for example, in setting a lower price for transport for the customer in the case of a higher order. But the margin for Storyous is uniform, at 3.79 percent per order.
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“The first priority for restaurants now is to survive this crisis. In the current conditions, however, due to the margin of delivery services, our survival would have to be at the expense of the quality of the raw materials from which we prepare food. And this way of survival does not suit anyone, the best choice for all of us now is OneMenu.cz. It’s not free, but it’s fair, “says Zdeněk Pohlreich about the project.
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However, on the first day of the launch of the service, the platform operator was criticized. The price for import is around 180 crowns. According to Storyous, restaurants must always consider whether the service of their business makes sense, as does the customer.
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Gastronomy fans also rushed with the help of restaurants, inviting people to order food directly and support through social networks. Even so, the losses for gastronomy are and will be enormous. Even without the autumn closure of operations, the Association of Small and Medium-Sized Enterprises estimated a decline of up to 50 billion crowns in 2020. However, due to the second wave of the epidemic, the final losses will be much higher.
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We give food: For the first time, the profit and delivery of not only food
In addition, the largest delivery service in our country, Dame Food, calculates that at the end of 2020 it will not end up in a loss for the first time and plans to develop its business for the next few years.
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“I hope we could look at the turning point this year, it’s high time, we need to reverse the losses from the last few years, when we were in the red. If our mother has historically invested half a billion in us, then the money must also return somewhere. Due to the fact that our mother is listed on the stock exchange, our investors have relatively high demands on it, “describes the head of the company Filip Fingl in an interview.
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We give food currently operating in 170 Czech cities, adding no plans yet. However, it wants to expand abroad and add other goods to the distribution of food.
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We’ll give food
Revenues in 2019 amounted to CZK 412.49 million.
In the same year, the company had a loss of CZK 62.59 million.
The company offers about 5,000 restaurants and 4,000 couriers work for it.
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“I’m definitely talking about expansion, I’ll keep where for myself for now. People in the context of today want to have things delivered to their homes and we are able to do it very well and quickly. We don’t just have to transport food from restaurants, but we can transport almost anything. We have cooperation with Tesco, we are testing the delivery of flowers and I would like to expand in this direction. We can be a great platform for anything you order and need to deliver within 30 minutes, ”adds Fingl.
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The company could thus compete with other courier and delivery services in our country. He plans to deliver animal feed, electronics or food. It wants to gain new customers by working with price and active communication.
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Couriers are increasing, the number of restaurants is changing
It will also have an expanded “fleet” of couriers, for which the number is growing by about 50 percent per year. In the second wave of the epidemic, their condition increased by hundreds. According to Fingl, a number of people from the gastronomy field also used this work. As couriers, they earn around 200 crowns an hour at Dáme’s meal.
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On the contrary, the number of restaurants offered on the platform run by it is constantly changing. Some closed their kitchens, while others refocused on delivery. However, Filip Fingl is also concerned about further developments in the field.
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“Some of the restaurants dropped out of our menu, mainly because they decided not to run the business in this situation. However, many restaurants have jumped on our platform due to the current situation, because there is not much other option now. The number on the platform is still growing. However, we are afraid that there will be fewer restaurants as a result of the measures, and then we may also have problems, “he said in an interview with the Business News List.
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