High commissions expose weakness in food delivery model

THE pressure for food delivery platforms to lower their merchant commission rates has intensified over the past two weeks, prompting GrabFood, foodpanda and Deliveroo to break their silence and explain that the money is used to pay riders fairly and cover the cost of service.

In doing so, the companies showed a reluctance to cut the commissions, which reportedly range from 25 to 32 per cent. The three players' explanation of their stance has either sparked more unhappiness or gained the public's understanding, but what it really exposes is a weakness in the food delivery model.

The commissions might be justified, but there is no denying that they are steep. This raises the question of why food delivery companies have not been able to keep costs low enough to offer a rate to food and beverage (F&B) firms that is not, at the very least, eye-watering.