Is Relying Solely on Delivery Apps Viable for Singapore Restaurants Amid Rising Commissions?

Relying solely on delivery apps is increasingly not viable for Singapore restaurants due to commission rates that compress already-thin profit margins.

The Commission Problem

Delivery platforms typically charge 20% to 35% per order, with major players like GrabFood and Foodpanda at the higher end of 25–30%. When combined with food costs (30–35% of revenue) and operational expenses like rent and labour (consuming nearly 75% of operating costs), restaurants face razor-thin margins. On a $25 order with a 25% commission, a restaurant loses $6.25 immediately—multiplied across hundreds of orders monthly, this becomes tens of thousands of dollars annually.

Why Sole Reliance Fails

The core issue is that some businesses increase revenue while simultaneously compressing profit margins. This creates an unsustainable situation where higher order volumes don't translate to higher profits. Additionally, restaurants have no direct customer relationships or data ownership when operating exclusively through third-party platforms.

Viable Alternatives

Several options offer better economics:

• Direct ordering systems: Flat-fee SaaS platforms like Eats365 and Oddle (10% commission) become cheaper per order as volume grows, compared to marketplace commissions. The Productivity Solutions Grant (PSG) can subsidise up to 50% of software costs for eligible SMEs.

• Zero-commission models: Marketplace @ WhyQ charges no commission, instead adding a 6% markup on food prices borne by customers, allowing merchants to increase margins.

• Hybrid approach: Using multiple channels—direct ordering, pickup options (typically 6% commission), and selective platform presence—reduces dependency on any single high-commission channel.

• Government support: Enterprise Singapore has funded 5 percentage points of commission costs for eligible businesses on major platforms.

The consensus is clear: restaurants should diversify revenue channels rather than rely exclusively on delivery apps to maintain viable profit margins.