As a nation in lockdown, takeaways offered a welcome break to our lives under house arrest. But while the ‘Big Three’ delivery platforms – Deliveroo, Just Eat and UberEats – experienced massive growth of demand during this time, the restaurants and takeaways making our food haven’t profited as much as you might think.
Each year, eateries across the country pay out more than £1 billion in commission to the Big Three. With commission rates typically as high as 30-35 percent, you’d be hard-pressed to find a restaurant owner who says you can make decent money through delivery orders alone.
Take a typical £20 food order. An outlet should expect to make around £11.11 gross profit if they sell directly to the customer (once VAT and cost of goods sold are accounted for). If that restaurant were to use Deliveroo, they would lose £7.00 in commission, reducing the outlet’s gross profit to just £4.11.
It’s a frustrating, and often debilitating, situation for small business owners trying to build a sustainable business.
I should know. For seven years I poured my heart and soul into NY Slice, the New York pizza brand I created and brought to life in Glasgow. The vision was a national roll-out. An outlet in every city in the UK, serving delicious NY-style pizza by the slice. We were heading in the right direction.
But then we hit a big fat COVID-shaped roadblock. Lockdowns meant closing our restaurant and switching to 100 percent delivery and collection. We believed that our loyal customer base would help cushion our transition to online, but we quickly realised that by having to use a third-party delivery platform like Deliveroo, we were unable to make a decent margin on the food we made.
Over the past five years, the total commission paid by NY Slice to the Big Three would have enabled us to open another two NY Slice delivery sites. The impact? Sadly, we had to close NY Slice.
My personal experience operating under delivery platforms is what prompted me to build Gravyy, a 0% commission delivery platform and marketplace built to give the restaurant and takeaway industry a fairer deal.
Our community-owned platform encourages users to order direct and only make money when our partners make money. We don’t charge a subscription fee until the eateries take a minimum of £100 revenue each week through the Gravyy marketplace.
Local, independent businesses provide the economic and societal support required for communities to thrive, creating real, local jobs, putting money straight back into the local economy. By supporting our local high streets, our local economies and local communities can thrive, making our villages, towns and cities a better place to live, work and visit.
We believe that by changing the way our customers run their takeaway and delivery business, we can help them to build a better future for themselves.
Chris McColl is the founder and CEO of Gravyy, a zero-commission food delivery and collection marketplace for independent restaurants and takeaways. Gravyy helps hospitality businesses grow by earning better margins on the food they make and sell for delivery or collection.
Gravvy are launching their Crowdcube campaign later this year.