And not necessarily all in a good way

The BBQ House in Nicosia is the ultimate small business. Only open in the evenings, serving mostly grilled food – kebabs, chops, and so on – it’s run by a married couple, Demetris and Daniella, both of whom have other jobs during the day.

Despite the modest scale, its window features something no restaurant – however small – can be without these days: stickers for Foody, Wolt and Bolt, the delivery platforms which have transformed the hospitality sector.

The restaurant has been open a year but they’re just breaking even, says Demetris, not yet making the kind of profit that would allow him and Daniella to quit their day jobs, which was the original plan.

Part of the problem are the costs imposed by the platforms, which take a fee of 23-25 per cent on every order they deliver. They also take 10 per cent in cases where a takeaway customer merely orders on the app, even if they pick up the order in person. 

In addition, the companies charge for boosting the visibility of the business on their apps and websites. “Let’s say with Wolt, I pay €50 extra every week so the shop will show up as soon as you click on the kebabs [section],” says Demetris. When they first opened, and views were low – so boosting was expensive – the charges just for Foody came to over €400 a month.

These charges are voluntary, of course – but it makes sense to pay when everyone else is paying. The platforms work like a supermarket, with consumers browsing and comparing prices; if you’re not easily visible, you might as well not exist. “You can’t really operate,” says Daniella, “without paying [the charges].”

“I get many complaints,” Fanos Leventis, head of the hospitality venues association Pasika, told the Cyprus Mail, referring to the general situation. “The issue of the platforms is an issue that’s seriously troubling the association.”

“We’ve reached a point where every business, large or small, is dependent on these platforms. I don’t consider it healthy, to be honest.”

The obvious counter-argument is that delivery apps bring a host of new customers who wouldn’t otherwise have found the restaurant. 

At the BBQ House, the split is about 50-50 between delivery orders (meaning Wolt and Co.) and takeaway. The latter are mostly from the neighbourhood – but the former come from all over. The obvious conclusion is that Demetris and Daniella have doubled their business – but have they?

That the apps increase traffic is undeniable. The catch is that people increasingly order on their phones anyway, whether for convenience or as learned behaviour from the Covid years – so some of your ‘new’ customers may in fact be old customers, just engaging in a different way and bringing in less money. Even those getting takeaway, as already mentioned, give the platforms a commission by ordering online, when they could just call the restaurant.

Consumers prize convenience and value for money, which is part of the problem. Special offers on the apps make things even worse, says Demetris, tightening his margins (though not the platform’s) even more. Still, you have to do it. “People look at the special offers, unfortunately.”

At the end of one particular month, when much of his delivery business came through special offers, the statement from Foody showed that Foody had actually made more money than BBQ House itself. Demetris – a big, bearlike man – was incensed. “Put a sign on the shop saying ‘Foody’ and pay me a salary, and have done with it!” he recalls yelling down the phone at them.  

For their part, the platforms insist they’re on the same side as small businesses, their goal being to balance the needs of what Akis Stamoulis, Wolt’s Regional Head of Communications & Public Affairs (South Region), calls the three “stakeholders”, that’s to say merchants, delivery drivers and users.

“It’s not in any platform’s interest for a business to be paying a commission that’s not viable,” Stamoulis told the Cyprus Mail. “Platforms don’t exploit businesses. Platforms want to help businesses, so that the businesses can help the platforms.”

Wolt’s goal is “to make the cities in which it operates better”, he says – “for businesses, for delivery drivers, and for customers…

“Basically, what we’re trying to do is build a win-win situation for all parties.”

“Despite rising food and operational costs, Foody has not raised its fees,” points out Christiana Potsidou, Foody’s head of marketing in Cyprus, in an emailed response.

“Small businesses are the backbone of our communities, and we understand the challenges they face in adapting to new technologies. We’re committed to offering the support they need to thrive in this evolving landscape.”

Both companies say their policies are flexible and there’s no “standard commission”, to quote Stamoulis.

The exact percentage taken by the platforms does seem to vary. Another, more established restaurant serving similar food to the BBQ House cited a figure of 19 per cent when approached for this article. That said, the smaller and newer a business, the weaker its negotiating position will be – especially when it’s literally impossible to succeed without being on the platforms.

Leventis offers one solution, which is currently being brainstormed – for businesses to co-operate with the association “to create our own platform”.

This would be non-profit, taking a cut of (say) 10 per cent, just enough to cover its operating costs. “But it can’t happen with just a few people. We need to get as many as possible.”

For their part, Demetris and Daniella have mixed feelings. “We’re happy, don’t get me wrong,” he says. “The platforms work, they just take a lot of money.”

His ideal solution would be to stay on the apps but hire his own delivery driver, so he’d pay less commission and have more control. He’s also been forced – reluctantly, he says – to charge a slight premium in the menu posted online, though obviously not 25 per cent more. Everyone does it, he insists, “otherwise you can’t make ends meet”.

It’s a little odd that people have embraced Wolt and Co. so wholeheartedly, when they usually end up paying more – though of course they also get the convenience of browsing and staying home, if that counts as a convenience.

“Let me tell you something,” declares Leventis. Delivery is a boon in many ways, and many of his members have thrived in the new way of doing things. “Essentially, though, it’s competing against hospitality.

“What I mean is, we want people to be going out, congregating, meeting up with friends. Not to stay cooped up at home.

“It’s something that exploded during the pandemic. We believed there was going to be a correction – but it hasn’t happened, or at least it’s been smaller than expected.

“It’s an easy fix. But it’s not hospitality.”