Food industry faces challenges amid takeaway platform fees

The rise in commission fees imposed by food delivery platforms is presenting financial challenges for restaurant sector in the SAR.

Industry representatives highlight that small and medium-sized enterprises (SMEs) are particularly affected, with commission rates reaching up to 50% per order.

This increase, combined with the necessity for businesses to participate in promotional campaigns, has put considerable strain on restaurant profitability, Aeson Lei, president of the Macao Catering Industry Association, told Macau Daily News.

Many local restaurants are struggling to balance rising operational costs while competing in an increasingly saturated market.

While consumer demand for food delivery services has grown, the associated expenses often outweigh the benefits for smaller establishments.

Some industry observers argue that Macau’s limited market size further complicates the situation, with many residents opting to dine across the border for more affordable options.

Lei notes that reliance on delivery platforms has forced smaller restaurants into challenging business models.

He points out that many establishments feel pressured to engage in platform-led promotions that significantly impact their profit margins. Restaurants operating in high-rent areas are especially vulnerable, as they face mounting financial burdens from rent, ingredient costs, and commission fees.

Another concern for the industry is the dual pricing structure imposed by delivery platforms. In addition to restaurants paying high commissions, consumers are also charged for delivery services, further complicating the pricing strategy for businesses.

In response, some restaurants have started offering discounts to customers who pick up their orders in person.

However, the convenience of delivery services continues to outweigh these incentives, keeping businesses dependent on platform-based orders.

Therefore, the associaiton is advocating for regulatory intervention to address what they see as an imbalance in market power. “If left unchecked, these rising fees could lead to the closure of many small businesses, leaving the industry increasingly dominated by larger corporations,” Lei cautioned.

The food delivery sector’s competitive landscape has already led to significant market shifts in neighboring regions.

The recent withdrawal of UK-based delivery service Deliveroo from Hong Kong highlights the financial pressures faced by companies in the sector. With fewer competitors remaining in that market, concerns are growing that similar trends could lead to even higher commission rates in Macau, Lei said.

Previously, the Macau Restaurant Owners Association has called for new regulations to address the exorbitant service fees charged by these delivery platforms.

According to Fong Kin Fu, representative of the association, the fees are excessive and lack transparent and reasonable calculations.
“There are no clear provisions on the charging standards of the platforms, and restaurant owners have to rely on takeaway platforms for food delivery to grow their business,” Fong explained. Staff Reporter