UK company Foodhub takes on Uber Eats, Menulog in Australia

AFR – 10^th February, 2021

British-based food ordering platform Foodhub is taking on Uber Eats, Menulog, Deliveroo and DoorDash, launching in Australia with a fee structure it claims is more profitable for cafes and restaurants.

Foodhub hopes to win cafe, restaurant and takeaway food customers by offering a flat ordering fee of around $15 a week (excluding delivery costs) rather than charging commissions as high as 30 per cent of food orders.

British-based online food platform Foodhub is challenging Uber Eats, Menulog and Deliveroo with a fee structure it says is more profitable for cafes and restaurants.  Supplied

Foodhub says it is the only major food ordering aggregator platform to employ a non-commission-based model, which it believes is financially unfair to business owners. The fixed monthly delivery fee helps food partners increase sales while retaining more profit.

Founded in 2017 by takeaway food store owner Mohamed Shakil and software developer Ardian Mula, Foodhub is the third largest food aggregator in the UK with a network of more than 20,000 restaurant partners.

Orders in the UK have soared by 66 per cent over the last 12 months as British cafes and restaurants have been forced to close and locked-down consumers have ordered online.

Last year, Foodhub expanded into new markets including the United States, Mexico, Guatemala, Ireland and New Zealand.

Its Australian launch follows the multi-million dollar acquisition of Eat Appy, an online ordering system used by cafes, restaurants and takeaway businesses for pickup and deliveries, table ordering and room service. Like Foodhub, Eat Appy charges weekly fees rather than commissions.

Foodhub co-founder and chief executive Ardian Mula said the disruptive food delivery platform had allowed takeaway food businesses in the UK to meet the surge in demand last year whilst retaining profits that would otherwise have been lost on commissions.

“We’re passionate about rolling this innovative model out globally, so to have acquired such a key player in the Australian market means we are in the perfect position to do this,” Mr Mula said.

“Acquiring the Eat Appy brand demonstrates our pledge to becoming the market leader for food ordering, achieving our ambition to help independent takeaways and restaurants grow and prosper as they continue to battle the chains.”

The $850 million online food delivery sector has been growing by more than 40 per cent a year for several years, according to Ibisworld, but the market is becoming increasingly competitive following the arrival of DoorDash in 2019 and the launch of an aggressive marketing campaign by Menulog, featuring rapper Snoop Dogg.

Last May, Uber Eats, which is the market leader in Australia with 67 per cent, dropped its commission rate to 30 per cent from 35 per cent and allowed restaurant owners to use their own staff for deliveries.

Uber Eats’ regional general manager Jodie Auster said the rate reduction was long term and was aimed at relieving profit pressure on restaurants.

Ibisworld expects online food delivery revenue growth to slow to 7.1 per cent a year over the next five years – reaching $1.2 billion by 2026 – as discretionary incomes decline, cafes and restaurants push back against high costs and rising competition keeps commission rates low.

“A growing number of restaurant owners are projected to move away from industry food delivery platforms over the period,” Ibisworld said in a recent report. “In response, food ordering and delivery platform operators are likely to establish partnerships with more premium and mid-range restaurants, to expand their range of quality food products.”

Foodora quit the Australian market in 2018 and further consolidation is possible as the major players squeeze out smaller operators.