Deliveroo’s Essentials service a ‘short-sighted and a simple money grab’

Restaurants and cafes are pivoting into grocery delivery as they battle to stay afloat during the coronavirus lockdown.

But many say they are finding it impossible to make ends meet with food delivery platforms such as Deliveroo and UberEats taking commissions of up to 35 per cent.

Speaking to Business Insider, Paul Kasteel, who owns Hoo Haa bar and Miss Kuku restaurant on Melbourne’s Chapel Street, said after doing $900 in sales in their first week under the new regime they were left with only $230 after taking out the cost of goods and 30 per cent delivery fees.

"My wage bill to keep my visa workers employed on a bare minimum was $2,500 and l haven’t even included fixed costs,” he said. “Even if we can make $1,000 per day, with only two to three staff working, we won’t survive with these guys taking 30% and no other revenue coming in."

The final straw came when Deliveroo launched its new Essentials service, delivering its own groceries to customers and directly competing with the businesses on its own platform.

"Like many restaurants on Chapel Street, we’ve started selling essential grocery items as a part of our delivery menu,” Kasteal said. “Our business now relies on deliveries and Deliveroo Essentials is the final nail in the coffin. Rather than support us they want to cut our lunch."

Chapel Street Precinct Association general manager Chrissie Maus described Deliveroo’s latest venture as a “short-sighted and a simple money grab”.

"We recommend Australians help independent businesses by ordering direct from restaurants because every dollar counts during these exceptionally tough times," Maus said.

"Many of our cafes and restaurants are jumping through hoops in order to survive and selling essentials was an innovative way to pivot and get money through the door during this harrowing period.

"Deliveroo’s action is short-sighted and a simple money grab at the expense of the Chapel Street Precinct cafes and restaurants they will need on the other side of this pandemic."