THE commission charged by major food delivery platforms is “exorbitant” and eats into the profits of food and beverage (F&B) businesses, industry operators said today.

This in turn puts restaurants in a dilemma as to whether they should continue using these delivery services when already faced with a drop in business due to the ban on dine-ins under the lockdown, a spokesperson for the F&B industry, Jeremy Lim, said in a virtual press conference today.

The 30% commission rate is imposed by two major players, whom Lim did not want to name, but called a “duopoly”.

Almost all restaurants now rely on food delivery services during the movement-control order (MCO) and enhanced MCO (EMCO) and have to pay this commission, he said.

“This duopoly currently demands for an exorbitant commission charge simply because of their size and reach. We are talking about 30% onwards.

“We seek immediate government intervention to engage and regulate the two largest food delivery platforms.

“We would like to request for a rebate from their exorbitant commission charges and want it to be lowered to 15% flat until January 2022.

“This is to help facilitate the survival of the businesses,” Lim said at the press conference held by six F&B associations under the United F&B umbrella.

While there are several delivery platforms in the country, GrabFood and Foodpanda are known as the two big players in the industry.

Recently, Malaysia’s low-cost airline AirAsia also ventures into the food delivery business.

Lim, who is also the vice president of the Restaurants and Pub Owners Association, said the reduction in commission is not an unreasonable request as he said that the shortfall could be recouped from the increase in demand. 

Lim said that currently more people have no choice but to depend on deliveries as dine-ins are banned under the lockdown.

The high commission fees have put restaurants in a dilemma, as every delivery order causes them to lose money.

“When I’m slapped with a 30% commission, I will end up losing 10% to 15% because my base cost is around 80% to 85%,” Lim said.

Lim, who owns nightclub Dragonfly KL, also said that the welfare of the delivery riders must be maintained, should the government or the big players decide to reduce the commission rate.

“They cannot use this reduction to fault the riders and reduce their commission rates. That should not be the way.

“Their welfare must be guarded and the ability of these riders to make a living has to be protected,” Lim said.

Lim also expressed concern over the effects of a prolonged MCO, which would see 60% of F&B businesses shut for good if the dine-in ban continues. – July 14, 2021.