Delivering change: We need rules for food delivery platforms
The overarching goal of regulations should be to ensure stability and fairness for consumers, restaurants and delivery platforms
Food delivery platforms have become vital to our daily routines, offering convenience by bringing our favourite meals to our doorsteps. Foodpanda arrived in Bangladesh in 2013, followed by Pathao Food in 2018. However, after ten years of coexistence, a significant problem has arisen in Bangladesh's food delivery scene – a lack of rules to govern these platforms.
The primary issue is the high commission rates charged by online food delivery companies, sometimes reaching 35%–40% per order, and these rates vary for different restaurants.
Imran Hasan, the then secretary-general of the Bangladesh Restaurant Owners Association, suggested a solution in a press briefing in 2021 – having a fixed charge system to make things fairer. He also highlighted issues restaurants face: significant sales, like Tk300,000, can result in meagre profits due to a substantial commission, such as Tk90,000.
On the other hand, Zubair Siddiky, the Managing Director of Foodpanda, shares a troubling reality. Despite earning only a 25% commission on a Tk100 order, equivalent to Tk25, Foodpanda often struggles to cover rider compensation expenses, typically ranging from Tk40-45.
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Even with larger orders, the company continues to face this financial challenge, as the entire commission is utilised to pay the riders, leaving minimal funds available to cover essential operational costs such as infrastructure upkeep, marketing and app maintenance.
Siddiky believes that Foodpanda's path to profitability relies on reaching a daily order volume of one million. However, achieving this goal requires adjusting their initial unsustainable commission rates of 10%-12%.
Given this situation, we need a solution that combines the different interests of food delivery platforms and restaurant owners.
Government intervention as a mediator is a potential solution to this problem. Collaboration between restaurant owners and platform administrators in setting fair regulations could benefit all parties.
Nevertheless, if they fail to cooperate, the conflict may intensify. Finding common ground is vital to resolving the issue.
These rules can cover essential areas. They might start by setting a fixed commission rate for every food delivery to reduce the current variability. Both restaurant owners and platforms should agree on this commission limit to ensure fairness.
These rules could also make restaurants responsible for order quality and hygiene. If these standards are not met, restaurants might have to compensate customers for poor orders.
The regulations should also deal with delivery timing, distinguishing who is responsible for late deliveries between restaurants and delivery personnel. Compensation details should be precise and based on a careful assessment of fault.
The regulations should delineate guidelines concerning the remuneration and safety of delivery personnel.
In cases where platforms like Foodpanda adjust base prices, they should transparently communicate these changes on their platform. This could involve presenting the original restaurant menu and platform prices. Ultimately, the overarching goal of these regulations should be to ensure stability and fairness for consumers, restaurants and delivery platforms.
For example, a pizza on the restaurant's menu is priced initially at Tk200. In that case, the platform should display the Tk200 price and the adjusted price, say Tk250, to maintain customer transparency.
Comparing these regulations to practices in other countries can offer valuable lessons for improving rules for food delivery platforms and the delivery itself.
The UK prioritises worker protection, whereas the US often treats drivers as contractors. A balanced approach could combine fair wages with clear worker status definitions to safeguard gig workers.
Japan regulates noise, while Nordic countries consider ecological impact. Regulations can encourage eco-friendly delivery practices, reducing both noise and environmental harm.
The USA highlights calorie counts, and Australia emphasises broader nutritional labelling. Expanding regulations to include comprehensive nutritional info promotes more nutritious choices in the food delivery platforms.
Sadman Yeasar Alam is an undergraduate student at North South University, Department of Law. Bashirul Islam Bihango is an undergraduate student at North South University, Department of Law.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
