Faustian deal? Malaysian restaurants' power struggle with delivery giants

With dine-in dead under lockdown, Malaysian F&B operators need GrabFood and foodpanda. But the food delivery platforms also charge a third of the restaurant revenue as their commissioning fee. Not an easy bargain

F&B businesses were allowed to be open for takeaways and delivery orders as Malaysia went into a partial lockdown on 16 March

Demand for food delivery platforms has surged, but restaurateurs are struggling to accept the high fees charged by the operators

Smaller and newer rivals have emerged to capitalise on the situation by offering much lower fees

Businesses are now being forced to innovate and adapt their business models to a changing order

Food delivery has become a lifeline to restaurateurs since Malaysia disallowed dine-in on 16 March—as a part of a government Movement Control Order (MCO). Except, it’s an expensive lifeline.

Major food delivery platforms such as foodpanda and GrabFood are charging high commission rates—25-35%—for their service, causing a backlash among Malaysia’s food and beverage (F&B) businesses.

Also, smaller, local food delivery platforms—that charge 10-20% commission per order—are taking on some of the load. Local platform RunningMan, which focuses on low- and middle-market restaurants, has seen a 500% surge in merchants requesting to sign up for its service since the MCO announcement, says co-founder and CEO Andrew Chee.

AUTHOR

Ka Kay Lum

Based in Kuala Lumpur, Ka Kay covers investment activities, aka following the money, across Southeast Asia and in-depth stories on the often-overlooked Malaysian startup ecosystem. She was previously a regional writer for Nikkei-owned DealStreetAsia.

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