The Confederation of Trade and Tourism, the Association of Hotels and Restaurants, and the Association of Small and Medium-Sized Enterprises and Tradesmen last week called on delivery and food companies to reconsider the amount of commission they charge for arranging food from restaurants.
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While the commission for meal vouchers is in the order of percentages, for the leading players in distribution in the Czech Republic it is 25 to 30 percent. According to the AMSP, this is twice as much as in England, for example, where, for example, the largest local service here, Justeat, charges a commission in the range of 10 to 14 percent.
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The food companies Sodexo and Edenred immediately started negotiating with the Association of Small and Medium-Sized Enterprises and Self-Employed Persons to reduce the commission. Sodexo will reduce its commission to three percent for at least six months from November 3, and Edenred will now charge a reduced commission of 4.5 percent. From 2 November, it will also return five crowns to meal voucher users for each payment in the restaurant worth over 100 crowns.
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However, distribution companies defend that they cannot do the same because they would be loss-making. “Our commission has a level of 30 percent. A large part of the commission is used to cover logistics costs. In addition, we can attract customers to a restaurant or business that joins the platform. In the end, a reduction in the commission would mean that we would only subsidize every order we deliver on that logistics. We would lose money on every order, which of course is not a long-term sustainable business, “describes Jantet, General Manager for the Czech Republic and Slovakia of the company.
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Wolt wants to offer restaurants another form of support, especially to increase the number of orders. The whole situation is assessed very similarly by the Bolt Food service, which, however, supports some restaurants with a significant discount and pays for transport for customers.
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How pubs and couriers share money
Price for food
Delivery commission
– is hidden in the amount for food
– ranges between 25 and 30% of the price of food
– if the restaurant charges CZK 120 for the meal, then a commission of 30 percent means that the restaurant will remain CZK 84 and the delivery will be CZK 36.
Import fee
– ranges between 0 and 150 CZK (depending on distance, time of day, occupancy, etc.)
– for some restaurants, imports are subject to delivery services (Bolt Food)
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The current situation is handled differently by deliveries
“We are considering various forms of support, currently we are paying a 30 percent discount for restaurants, which is provided to customers. We believe that we will be able to increase the number of orders as much as possible. If we add other costs for the operation of the platform, such as customer support or marketing, and the fact that we redistribute part of the commission among couriers, it turns out that we are currently losing. We believe that this investment will pay off for us and that restaurants will continue to use Bolt Food in the future, “said Marek Maxa, Country Manager at Bolt Food ČR.
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The most widespread domestic delivery company Dáme potravin, which operates in 170 cities and thus covers more than 60 percent of the population, commented on the whole situation for the News List as follows:
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Import companies also take a different approach to paying the import fee. Bolt Food pays for the customer at partner restaurants, at other users the user pays up to 145 crowns for the import. At Wolt, the customer paid over 140 crowns for transport at peak times and over greater distances. However, the company reduced this maximum to 99 crowns yesterday.
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“The entire amount of the delivery fee goes from one hundred percent, whether it is 30 crowns or 100 crowns, to the courier for delivering the food on. And more than half of the commission also belongs to the courier. Of the smaller half that remains, we pay some fees to the bank and at the end of the day we have a very small margin, which we have to cover any marketing costs, employees, etc. So at the end of the day we are a loss-making company, “describes Jan Foret’s pricing for Wolt.
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However, it was the delivery services that were called the winners in the spring during the first wave of the epidemic. In April 2020, for example, the head of Dáme potravin, Filip Fingl, stated that growth had accelerated significantly thanks to a nationwide quarantine.
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“The number of orders for Dame Food is growing steadily year-on-year and by 45 to 50 percent in the long run. We kept to these numbers during most of March. In the last two weeks, however, growth has accelerated and we have grown by more than 60 percent year on year. In addition, over the last month, we have seen an increase in interest from new customers who have not tried food delivery so far, ”said Seznam Reports in April 2020.
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The year-on-year increase in delivery services by tens of percent is a nationwide trend, and the interest from customers, which is confirmed by all market players, will be supported by deteriorating weather with the arrival of autumn.
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Domino effect
According to Luboš Kastner from the Association of Small and Medium-Sized Enterprises and Self-Employed Persons, the aim of pubs is not to dictate the amount of commissions to distribution and meal services, but according to him, the help that restaurants need is in place.
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Bankrupt pubs would eventually be reflected in the diversity of the offer and interest of customers in distribution – and thus in the results of distribution companies. Wolt, for example, has already seen a decline in the number of restaurants.
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“In terms of free enterprise, you can’t tell anyone what the commission should be. What we are saying is that restaurateurs, without whom delivery services could not exist, are now in an extremely difficult situation. And partnership is about helping partners in crisis. We only invited them to consider helping and passing on the costs of delivery to the guests. And especially in Prague, where the crisis has affected gastronomy perhaps the most, “Kastner told Seznam Zprávy.
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The Czech customer will not accept the increase
However, according to the experience of the Wolt delivery service, customers always react negatively to the price increase in terms of the volume of orders.
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“Any change in prices means a dramatic drop in what people buy. If we transfer the burden to the customer, we will not end up with anything extra and the restaurant will have a much worse result, people will simply not buy it, “says Wolt Foret.
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Although the mentioned delivery services, unlike meal voucher companies, will not go down with a commission, they are trying to offer restaurants an alternative solution. For example, Bolt Food has extended delivery times to midnight, it also pays for the aforementioned 30% discount on food from selected restaurants, pays for shipping and customers work to reduce import times by expanding the number of partner couriers.
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In an interview with Seznam Zprávy, Foret from Wolt stated that they wanted to focus on the development of restaurant marketing activities and the consequent increase in the number of orders. On Thursday, the company introduced a support package for restaurants. In addition to the aforementioned reduced maximum price for transport, it also introduces a 0% commission by the end of November for orders that the customer orders via their website and picks them up in person at the restaurant, and the option of a restaurant tip without commission.
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Representatives of associations, restaurants, but also fans of gastronomy in recent days have urged customers not to order food through delivery companies, but to pick it up in person at their favorite company, which they want to support. This is how the #order order first initiative was created, for example.
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At the same time, new delivery companies are constantly emerging, which are significantly cheaper – and some restaurants have joined the organization of their own delivery.
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