The Real Cost: Food Delivery In Singapore

If online food delivery was a convenience before, the COVID-19 pandemic has surely turned it into an essential service.

Online food delivery became the main way to continue getting our meals (and bubble tea fix) after we’ve been forced to stay home during the circuit breaker.

Online food delivery also helped struggling restaurants and eateries survive a tedious year of decreased foot traffic and reduced customer capacity. 

In the long run, the food delivery sector will continue to play an important role as we come out of the pandemic. 

While undoubtedly important, online food delivery is not without its faults. It is, afterall, a complex, and intensive business and logistic operation that demands a high level of sophistication. And that means heavy investment in resources.

Maybe that credit card that gives great deals on food delivery apps is more worth it than it seems?

Here’s what you need to know about the real cost of the online food delivery services that we have come to know and love. 

 

	Food delivery	Takeout	Dine in	Variance vs dine-in
Hawker dish(BBQ stingray, small)	$18.59	$12.50 (inclusive of package cost)	$12	+$6.59
Restaurant meal(Beef noodle, reg)	$15.39	$11.50	$11.50	+$3.89
Bubble tea(Honey green tea, lrg)	$13.89	$4.30	$4.30	+$9.59

We know that food delivery costs more than takeout or dining in, but how much more are we talking about? 

In this pseudo-scientific field test, I decided to see how much it would cost if I made three orders - a hawker dish, a restaurant meal, and a cup of bubble tea - using my usual food delivery app. Then, I looked up the prices for takeout and dine in for comparison.

Food delivery is the most costly; but that’s to be expected, given the delivery fees. What’s shocking is the amount added to my meal.

Surprisingly, the restaurant meal had the least variance, as there was no in-app mark-up on the beef noodles. The increase came purely from the delivery fee. 

The hawker dish had the second-highest variance, due to a combination of a hefty mark-up on my meal ($12 vs $15.30 in-app) and the delivery fee ($3.29). Considering that this particular stall is just a five minute walk away, I hope I never get so lazy that I resort to food delivery for this.

Besides, can you imagine the judgment from my rider? 

As for my solitaire cup of bubble tea, the difference is a hefty $9.59, but that’s because there’s a $10 minimum order for delivery. This resulted in a small order fee of $5.20 being added to my bill. Without the $10 minimum order, the variance would be $4.39 ($3.89 for delivery + a markup of $0.50 on the drink) - more than double the cost vs takeout or dine in. 

The most important takeaway from our field test is that you should never order just one cup of bubble tea for delivery. 

The other just as important takeaway is that when you use a food delivery service, you’re paying not just for the delivery of your food and drinks. There are other costs to consider, like the following:

Item	Typical price range
Markup on dish	25% to 30% or more, depending on platform
Delivery charges	From $2 onwards, depending on distance
Small order fee	Varies, imposed by some restaurants or hawkers
Service fee	$0.20 to $0.50 or more, depending on platform

Markup on dish

This is the main way your food delivery service makes money. Although the markup is charged as a commission, not every eatery passes this cost to the consumer. 

For example, in my field test, the hawker stall clearly passed on the bulk of the commission (if not the full sum) to the consumer, pumping up its prices considerably for delivery orders. 

For the bubble tea, there was a markup of $0.50, which worked out to be roughly 11%. Either the bubble tea shop worked out a lower commission, or absorbed part of it. 

And as for the beef noodles, there was no markup, which means that the store likely absorbed the full commission.

Delivery charges

These mostly go towards your driver/rider, and make up part of their wages (the other portion usually comes as incentives and bonuses for good performance and/or completing a higher number of deliveries).

Seeing how our riders and drivers work so hard to get our orders to us, I’d say this is the most justified portion of the charges. 

Small order fee

You may notice that certain outlets impose a minimum charge for delivery orders. Some restaurants employ their own delivery partners, and so seek to cover the cost of the trip with a larger total bill. Others may do so to ensure a certain order value per customer. 

No matter the reason, if you fail to meet the minimum charge, you will be slapped with a small order fee that makes up the difference. In my bubble tea example, the minimum order of $10 on my $4.80 bubble tea resulted in a small order fee of $5.20.

Service fee

You may also see a small fee, usually $0.20 or so, added to your final bill. It’s usually indicated as a service fee, and may be used for operation costs, rider programmes and other business initiatives.

GrabFood, Deliveroo and foodpanda are arguably the three most popular food delivery platforms in Singapore, with the widest coverage and the largest fleets. 

Here’s a side-by-side comparison of their estimated typical costs.

Item	GrabFood	Deliveroo	foodpanda	airasia food
Markup on dish	25% to 30%	Up to 30%	30% to 35%	15%
Delivery range	Islandwide	According to zones	Restricted to certain distance	Within 20km of restaurant
Delivery charges	From $3 onwards, depending on distance	$3 to $5, depending on distance	$2 onwards, depending on distance	$2.99 onwards, depending on distance
Minimum orders	Yes, depends on restaurant/hawker	Yes, depends on restaurant/hawker	Yes, depends on restaurant/hawker	Yes, depends on restaurants/hawkers
Service/platform fee	$0.20 for delivery fees less than $6	$0.20 to $0.50 or more	None	None
Membership	None	$16.90/mth - Free delivery for orders $18 or more	$7.99/mth - Free delivery for orders $15 or more	None

Of the three platforms, GrabFood provides the greatest flexibility. You can get your favourite dishes delivered from the other end of the island - provided the restaurant is on the platform and there’s a driver willing to make the trip.

This comes at a price, of course. Like its competitors, GrabFood delivery charges are determined by distance, so the further away your outlet is, the higher you can expect to pay. However, because GrabFood doesn’t limit your orders according to delivery zones or within a certain distance from you, delivery charges can be significant. 

That’s not to say nearby outlets are automatically spared high delivery charges. Price surges can apply during peak periods, in order to encourage drivers to take up your order.

So while you potentially have a greater chance of satisfying your craving with GrabFood, you should be prepared to pay for it. 

At present, there’s no membership scheme for GrabFood. Rather, whatever you spend on GrabFood earns you Grab rewards points, which you can use to redeem vouchers and perks for other Grab rides and such. 

Deliveroo offers a more consistent range of delivery fees that rarely goes above $5. This is because it delivers according to a zone system, so you’ll only be allowed to order from the eateries or central kitchens within your zone. 

There are occasional tie-ups and promos that offer free delivery on selected outlets, or extended delivery for featured restaurants, which make for good money-saving opportunities.

Deliveroo’s membership scheme costs $16.90 per month in exchange for free delivery on orders $18 and above However, you can only use this perk at selected restaurants.

As for foodpanda, deliveries are capped to eateries and outlets located within a certain distance from your location, presumably to limit the distance your rider has to travel. 

Depending on your location and the selection of eateries around you, your food options will vary. Anyhow, it is a good platform if you’re keen to explore the gastronomic options near you.

Do note that the platform has started to incorporate surge pricing in their delivery fees.

foodpanda has a membership called ‘pro’ that gives you free delivery for all orders $15 and above. The monthly fee is an attractive $7.99 at the point of writing, but this could be a promo price that might change at any time.

Unlike its competitors, airasia food charges a low commision of only 15% to restaurants, which translates to possibly lower-priced meals for you.

Meanwhile, delivery fees start from a competitive $2.99. For this reason, airasia food is worth checking out at least once.

As they sign on more riders and food outlets, this new player could wind up as your new favourite food delivery app.

Also, you can earn BIG points at the rate of 1 point per $0.30 spent on the platform, which can be redeemed for flight and travel perks later on.   

#1 Combine your orders

Since delivery charges are imposed based on per delivery instead of how many food orders are taken, combining your orders will lower the cost of delivery for each meal or person.

For example, if you’re paying $5 for delivery for a $15 fried chicken meal, consider ordering two meals at a go (and store one for later). While you will pay more overall on account of the extra meal, the overall delivery charge will still remain at $5, or $2.50 per meal. 

The same effect can be achieved if you order multiple meals for your family, or even in conjunction with your neighbours

If you have access to hawker centres, food courts or central kitchens on your app, you can order many different dishes from multiple stalls. This way, you can combine orders while allowing everyone to have their choice of meal. 

#2 Sign up for memberships

If you’re a heavy user of food delivery apps, consider signing up for a membership. You’ll save on delivery fees on your orders, at the cost of a small monthly fee. However, take note of the terms and conditions around your membership. 

Free delivery only applies for orders above $15 for foodpanda and $18 for Deliveroo respectively. Thus, memberships are worthwhile only if the bulk of your orders hit or exceed the qualifying threshold.

If you find yourself increasing your order just for the free delivery, it’s probably better not to sign up and simply pay the delivery charges.

#3 Make use of cashback credit cards

Food deliveries are one of the top items we spend on, so it’s not surprising that several credit cards offer great rewards for this spending category. 

Cashback cards are a great way to save on your food deliveries, considering the generous cashback available. Take for example, the OCBC 365 credit card that gives you 6% cashback (capped at $80 per month) on dining, including online food delivery. 

Prefer unlimited cashback with no minimum monthly spends? Try the American Express True Cashback card or the Standard Chartered Unlimited card. Both give you 1.5% cashback on every dollar you spend.

Amex Singapore Airlines KrisFlyer Credit Card Welcome Gift: Receive up to 17,000 KrisFlyer miles (enough to redeem a return trip to Bali on Singapore Airlines) with annual fee payment and min. spending of S$1,000 within first month of Card approval. Available to new-to-American Express cardmembers only. Valid till 2 December 2024. T&Cs apply.