Skip to content Skip to Search
Skip navigation

Dinner is served – but not like before

As people are dining out again, food delivery apps need to rethink their model

Belgian Beer Cafe, Dubai Creative Commons/TCS digitalworld
The Belgian Beer Cafe in Dubai. Post-lockdown, dining has to feel special again

During the pandemic, many food and beverage businesses turned – some, for the first time – to delivery services such as Talabat, Uber Eats and Deliveroo to get their products to customers in a quick, reliable and safe manner. 

The food aggregator apps proved vital for cash flow in that period. In the long term, however, there is a question mark over how sustainable they are for both restaurants and themselves. 

Despite the volume of orders doubling or even tripling during the pandemic, delivery companies are yet to be profitable. A business model that is solely reliant on commissions from restaurants is clearly not working. Now, with more and more people dining out again, this is unlikely to change any time soon. 

In a crowded marketplace, there has been a clear focus on driving revenue growth, by undercutting delivery charges and commissions at the expense of profitability. When the power is no longer with the delivery companies, it is hard to see how they can redress this balance. Is an increase in commission really the answer? 

Small restaurants that are struggling to cover existing commissions – generally around 20 percent – already charge an average of 23 percent more than if a diner orders with them directly. The convenience of a seamless door-to-door delivery is worth it for many, but continuing to pass increasing costs on to the consumer rarely ends well, even in the UAE.

Where else to turn? Drivers simply cannot complete more deliveries per hour than they currently do. Indeed, drivers from more than one delivery company in the region went on strike in May over pay and conditions. 

If there is any cloth to be cut, it isn’t here. At present, technology cannot offer further cost savings.

Many seem to be putting their hopes in faceless “dark kitchens”. Essentially a shared workspace for restaurants, they have prompted concerns over quality, as well as accusations that they kill restaurant culture. Are they the answer? 

In a city of people who are constantly on the go, delivery apps will always have their place but it is clear that, in order for them to still be around in the future, they need a rethink. 

For restaurants, now more than ever, it is the time to focus new time and money on making sure that dine-in experiences are the best they’ve ever been.

Naim Maadad is chief executive and founder of Gates Hospitality and a board member of UAE Restaurants Group

Latest articles

Young Asian broker international stock traders working at night in office using computer and thinking.

China to sell dollar bonds in Saudi Arabia 

China will sell dollar bonds in Saudi Arabia this month, its first debt issuance denominated in the US currency since October 2021. The imminent issuance marks a further deepening of ties between Opec’s top oil producer and the world’s largest economy by purchasing power parity.   China is Saudi Arabia’s most important trade partner, buying 16 […]

An Emirates plane refueling. The UAE wants 1 percent of its jet fuel to be locallly produced SAF by 2031

Fujairah to provide 150m litres of ‘green’ aviation fuel 

The expansion of a biofuel facility in the UAE will provide nearly 10 percent of the world’s sustainable aviation fuel (SAF), the project’s operators have claimed. Mercantile and Maritime Group, an energy and logistics company specialising in the physical trading of oil and gas, announced on Tuesday that its facility in Fujairah will be expanded […]

Air freight has been an increasingly important method of transportation since the conflict in the Middle East erupted and shipping routes were disrupted

Saudi Arabia and US expand aviation deal to include cargo

Saudi Arabia and the US have expanded their bilateral aviation agreement to allow seventh freedom traffic rights for all-cargo flights. Seventh freedom allows airlines to carry on flights that originate in a foreign country, bypass its home country, and deposit the cargo or passengers at another international destination. The amendment will allow Saudi Arabian airlines […]

A stand in Beirut displays Arabic newspapers featuring the inauguration of President Donald Trump in 2017. The Arab world has generally welcomed Trump's return to the White House

Arab world welcomes Trump back to the White House

The Arab world has hailed Donald Trump’s successful bid to return to the White House, with his long-standing personal, business and political ties to the region bringing hopes of closer bilateral relationships with the United States for the next four years. The Emir of Qatar, Tamim bin Hamad Al Thani, was the first GCC leader […]