platforms
What are the fees charged by delivery apps? (Photo: iStock)

The Crepas París restaurant, located in the north of Mexico City, only remains on home delivery platforms so that its diners don’t forget about it.

María Angela Piña, owner of the restaurant, tells us in an interview with Tec Review why she doesn’t plan to abandon the two applications where she makes 55% of her sales: Sin Delantal and DiDi Food, although it’s less about the profits they generate than vanishing from the sight of these platforms’ users.

“We believe it’s important to maintain a presence. It’s one of the ways we keep working with the users. Now, we include a card in our deliveries with our WhatsApp number for them to make orders directly, so we can avoid the fee to the restaurant,” she says.

For many restaurants, being on these platforms isn’t a good deal. A lot of the fine print causes a loss of profits due to fees. In San Francisco, USA, they’ve limited the charge for application fees during the health emergency to 15% of total sales. This issue hasn’t been brought up yet in Mexico City and could affect restaurants if they continue at this pace.

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Fine print

When trying to register your business on meal delivery apps like Rappi, the registration sites promise an increase of up to 30% in sales, increased exposure, and brand growth through these platforms that promise to be ideal for small and large businesses.

However, platforms such as Didi Food, Uber Eats, and Rappi have different types of contracts, exclusivity clauses, and promotions they prefer that restaurants use in order to increase their sales in the app.

Businesses need to know the factors that influence the use of these tools in order to avoid misunderstandings. In the case of Rappi, owners should know that there are different forms of contract in the app: marketplace and full service.

The former consists of restaurants being responsible for their operations; i.e. they do their own home deliveries. They don’t need the Rappi deliverers and they collect cash payments themselves.

The other mode is full service, which includes delivery service. The deliverers are in charge of collecting money. The vast majority of restaurants we contacted have this type of contract. The fee varies, as it does in Uber Eats, depending on the average purchase and the number of branches.

The second thing to be aware of is that the fee is variable based on business sales and whether you’re exclusive partners with Rappi. This means that the fee may be lower if other apps such as Uber Eats and DiDi Food aren’t used, although the amount is confidential and depends on the agreement reached with the business.

A third point to be aware of is that signing with Rappi comes at no cost. The charge is a per sales commission plus VAT on each order placed through the app. Payments are made on a weekly basis and are based on the amount sold the previous week. The remaining amount is transferred to the bank account provided by the business.

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DiDi Food and its promotions

While this service often has the lowest cost, it constantly suggests applying coupons or discounts at the point of sale for more growth opportunities and to optimize your business.

This platform continues to grow in the country. In April and May, demand for deliveries grew by 250%. In June, various restaurant chains such as La Casa de Toño, La Cervecería de Barrio, and Burger King also joined the app.

Recently, DiDi Food announced a new expansion program that integrates non-food retailers, such as pharmacies, to prevent further impact on their sales due to the lockdown. In addition, the Chinese company’s delivery app announced that during June and July it would absorb both VAT and income tax to support restaurants and help them overcome these difficult times. On August 1st, they began withholding 8% for VAT and 0.4% to 5.4% for income tax depending on each restaurant’s monthly turnover.

This app charges a 30% commission per sale, which is calculated to absorb delivery costs and to impact the community as little as possible.

Uber Eats and Rappi, the lockdown winners

Personal finance platform Fintonic published the study Consumption in Meal Delivery Apps during Covid-19 in Mexico, which found that when the health crisis began in the country, restaurant purchases through Rappi rose 10.98%, while they rose 6.24% for Uber Eats. Meanwhile, consumption in restaurants fell 280% compared to the period of March to May 2019.

According to data provided to Tec Review by the National Chamber of the Restaurant and Seasoned Food Industry (Canirac), more than 50% of the restaurants affiliated with the agency were registered on delivery platforms.

However, with fees like Uber’s, there are also business owners who have decided to create their own online sales strategies through apps such as WhatsApp in order to be able to do their own home delivery, with the aim of maintaining full employment at various locales.

“If you want to help your favorite restaurants more, call and ask for home delivery if you get the chance. That gives us more profit and helps us fight to survive,” says María Angela Piña.

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