Food delivery companies serve up a boost to restaurants' bottom line
When US food delivery giant UberEATS launched in Australia, many restaurants feared it could be the death of them. Instead, it’s often served up a huge boost in business.
“I think it’s saved us,” says Danilo Tozzi, the owner of iconic Italian restaurant Caffe Roma, in the heart of Sydney’s Kings Cross, an area hard hit by the NSW Government’s lock-out laws which have dramatically cut foot traffic, and business.
“It can be very quiet here now, but because of UberEATS, we’re incredibly busy. We’ve even started opening up for lunches Thursday to Sunday too as we decided to open early to do the prep for meals being ordered through UberEATS, and thought we might as well open up to customers too.”
Food deliveries haven’t affected Caffe Roma’s eat-in trade. Photo: Supplied
It’s a similar story throughout Sydney’s top café and restaurant areas where UberEATS and rival food delivery services Deliveroo, Menulog and Foodora drop off food to diners ordering through their mobile phone apps.
With the food delivery market in Australia now valued at about $3.5 billion, the value of sales is rising year on year by 5.18 per cent, according to the Australian Retailers Association. That’s not coming at the expense of eat-in business at cafes and restaurants, which has been growing at an even higher 5.32 per cent.
“We’re seeing a whole host of people buying food through UberEATS who wouldn’t normally eat in those restaurants or who don’t want to go out at all,” says ARA executive director Russell Zimmerman.
“Only occasionally do we hear of restaurants saying they’re empty because of UberEATS. That’s rare. More often, we’re hearing that people have 65 people sitting in their restaurants, and there’s a whole lot of deliveries going on at the same time out the back which enables restaurants to amortise their costs over a bigger number of customers.”
UberEATS first opened in Sydney’s inner east in July 2016 and now covers some 600 square kilometres of the city, from Dee Why to Parramatta to Malabar, with more than 1000 restaurant partners. It’s now so popular, last month even McDonald’s became available on the service, after being asked regularly by consumers why they couldn’t order through the app.
The Burger Shed in Mosman has seen sales expand by 25 per cent as a result of food deliveries. Photo: Burger Shed
On the lower north shore, Mosman’s Burger Shed now has 80 per cent of its customers coming through UberEATS. “It’s growing really fast,” says owner Ashfin Siadatkhoo. “It’s so well organised and we’ve seen total sales go up by about 25 per cent.”
In Bondi, café Swell Bondi on Curlewis Street has seen a 10 to 15 per cent rise in turnover since adopting UberEATS. “Custom has really gone up on weekends particularly,” says manager Aaron Stannard.
“We still get the same number of people coming into the café all the time, but this business is on top of all our previous business. I think some people like to stay at home, especially on weekends, if they’ve had a big night or something, and then just order food.”
In the inner-west suburb of Newtown, Yanny Layantara of Japone Sushi says business is up by 15 per cent on the in-restaurant trade. “We are noticing by how much business is picking up now,” he says. “People still come to the restaurant but sometimes they decide to have the food delivered as well.”
UberEATS general manager for Sydney, Matt Denman, says with an average delivery time of just 30 minutes across Sydney, customers have been embracing the service as a quick and reliable way to get a wide range of food at the push of a button.
“We’ve been overwhelmed by the positive response from Sydneysiders who have embraced a new way to get the food they love delivered to their door at Uber speed,” he says. “For restaurants, UberEATS is quite literally creating new business models and economic opportunities.”
The cafe Swell Bondi has found business has grown especially on the weekends as a result of food deliveries. Photo: Swell Bondi
At Caffe Roma on Kellett Street in Potts Point, one of Sydney’s original Italian restaurants operating for more than 30 years, and one of the first restaurants to open up to UberEATS in Sydney, Tozzi says it’s been one of the best decisions they’ve ever made. Now approaching a half of their custom is via food delivery, and they’ve sometimes cut down on the number of waiters they employ too, to reduce their costs further.
“People still come into the restaurant but I think more know about it now as well because of their experience of UberEATS,” Tozzi, 49, says. “In the winter when people don’t want to go out to eat so much, they’re happy to have their meals delivered instead and that really helps to make up the shortfall.
“Also, UberEATS goes on till 3am and we’re finding we’re now very busy providing meals from midnight to 2am to people who want to eat late. It’s incredible.”
UberEATS has also been responsible for a rise in the number of ‘ghost’ restaurants – kitchens set up just to service customers remotely, and which don’t have tables and chairs for them to eat in-house. Denman counts that as a big success too.
“In the past year we’ve also seen delivery-only kitchens and low-cost expansions pop up,” he says. “Those virtual storefronts give new entrants the opportunity to reach customers without all the expensive overheads.”
But a group of restaurateurs at Australia’s Top Restaurants Business of Food Forum at Sydney’s The Star recently said they felt the new technology like UberEATS was more likely to enhance the restaurant trade than disrupt it.
Head of Merivale Group Justin Hemmes said: ”I feel that we’re one of the few industries that will be less disrupted by technology than most. It drives people to embrace the social element of dining and drinking…because people crave more social interaction.”
