Grab Breakdown Shows How Much Merchants & Riders Actually Earn With Pizza Slices
If there’s one good thing about the Covid-19 pandemic, it’s that food delivery services are thriving. Ever since ‘Circuit Breaker’ came into play, demand for delivered food has soared 20-30%.
But while food delivery services enjoy highs, F&B businesses are going through lows. To make up for loss of foot traffic, food merchants are signing up with middleman platforms to boost their reach, but at what cost?
After some netizens helpfully broke down the cost partnering delivery apps, they conclude that F&B businesses don’t earn much from the partnership.
However, Grab has now joined the fray, and provided their own breakdown to show the other side of the story.
In their Facebook post on Friday (17 Apr), the green giant used a pie chart in the form of pizza to help those that cannot math visualise the split.
MS News breaks their pizza down further.
Grab shows merchants get 70% or more of order value
Let’s assume that the standard GrabFood order costs $28, with $25 being the order value and $3 being the delivery fee.
According to the Grab breakdown, merchants get a minimum of 70% of the order value.
This means that merchants will receive a minimum of $17.50, which is equivalent to 62.5% of the total GrabFood cost.
Grab receives 30% of order value as commission & delivery fee
Of the total order cost of $28, $10.50 (37.5%) goes to Grab.
However, the delivery platform has specified that riders get to keep the delivery fee, which starts from $3 and increases based on distance. Even if customers redeem free delivery promotions, Grab compensates them the delivery fee.
Grab also pays rider incentives with the commission they earn. For those who can’t quick maff, this means that riders get a minimum of 10.7% of the total order, which is 28.6% of Grab’s commission.
This also means that Grab earns at MOST only $7.50 from a $28 order, which equates to roughly 26.7% of the entire order.
But wait, there is more spending Grab has to do.
With their 26.7% share of the entire order, Grab still has to pay off operational costs before the rest of the sum is considered profit.
Breakdown shows Grab doesn’t earn that much too
Given that Grab only keeps a maximum of 26.7% of the entire order, it’s hard to see them being unreasonable in their terms and conditions.
In fact, with this small percentage, they are also launching new initiatives with the customer in mind to create a win-win-win-win situation for themselves, customers, merchants and riders.
Business is business at the end of the day
At the end of the day, business is business, and F&B merchants have to decide themselves whether engaging with food delivery apps is in their best interest.
Customers also need to understand that by ordering off food delivery apps, they are essentially paying for a service, and this will cost them.
Of course, in an ideal world, everything is cheap and everyone earns big. Sadly, because of math, this is unlikely to happen. Hence, we should all be penny wise and pound wise as well, so we can get maximum utility out of our money.