How continuous rise in fuel prices is affecting the food service industry

Rising fuel prices have hit the middle class hard, but those who have taken the worst affected are the end consumers. Petrol price in India opened the month of March standing at the rate of INR100.56 per litre. The fuel price has witnessed a hike on 6th April, 22 to INR 111.07 per litre after being stable for a month which in turn has resulted in a crushing blow to the end consumers who mostly depend on delivery for their day-to-day needs. For instance, in the case of office-goers, who have recently started going back to the office and prefers to eat out, have to shell out extra now than earlier. While food ordering apps have already charged high due to the additional GST burden from early this year, rising petrol prices are further accelerating the delivery charges, which is an additional burden on the consumers.

In parallel, food delivery people’s earnings have taken a hit with the sharp increase in fuel prices across the nation. With the rising fuel prices, many of them are forced to spend a huge amount to meet their fuel expenses. According to them, they spend roughly INR 9,000 to 12,000 each month to cover their fuel costs. 

“Each day, I have to fill up to three litres of petrol, which costs around INR 350. The total monthly fuel expense will be around INR 9,000. It was around INR 6,000 last year. For the fuel expense, we have to shed a major portion of the revenue. Since it is difficult to get another job here, I am forced to do the job of a delivery boy,” said Sadak Ansari, a Bihar native who is working as a delivery partner with one of the aggregators.

The delivery boys have to travel nearly 200 to 300 km in city traffic each day to deliver the food orders to the customers. “Everyday, I have to deliver over 20 food orders to the customers. If we couldn’t do that, our earnings would be very low. So, we are forced to travel 200 to 300 km per day to meet our daily target. If the amount we spent on fuel was around INR 7,000 last year, we are now spending more than INR 10,000,” said Rakesh, a BTech graduate and a Kochi resident who joined the online food delivery job in 2020. 

According to the food delivery person, companies such as Swiggy and Zomato should provide more incentives to cope with the hike in fuel expenses. Earlier this year, with rising fuel prices pinching the pockets of its delivery partners, foodtech platform Zomato has put in place a revised pay structure for them which will now include a component of distance pay. It has also introduced a long-distance return pay which means for every long-distance order completed, its delivery partner would either receive another order within 15 minutes that would bring them back closer to their base working location or they will get an additional payout for travelling the extra distance.

Tencent-backed Swiggy also has a plan under works to cushion the impact of fuel price rise on riders, according to sources. The startup has over 130,000 delivery partners on its platform currently. 

“At present, we have to deliver nearly 20 food packets a day to get INR 1,000. From this, we have to spend INR 350 on fuel. If the companies could provide some incentives, we would be able to deal with the crisis. As of now nothing has been informed yet. The government should also intervene in the matter,” said Manikandan, Delhi based online food delivery person.

Meanwhile, several people have shifted from motorcycles to bicycles, mainly after the hike in petrol prices. “I have rented a Kochi Metro bicycle, which costs only INR 700 per month, to deliver food packets to the customers. If I am using a motorcycle, I will have to spend a huge amount on fuel,” said Vasudev, an Andhra Pradesh native working with the aggregator in Kochi. 

In the wake of this steady rise in fuel prices, several business owners have decided to increase their rates also. “I have been running a tea cafe for several years; I have to send boys for home delivery. They have started demanding increase in their incentives as petrol is on fire; so I have increase the rate of the juices. I know the customer will not like it but I am left with no option,” said So Tea Cafe owner Vijay Diwan from Lucknow.

But with the rise in fuel prices, few stakeholders are making it to their advantage. Incentivising on the working migrants, who have just returned to the work locations after two years, still figuring out the meal plans, subscription based food delivery models like Sprink Online are offering lucrative deals. They provide flexibility for a hybrid model, whether the person orders from home or from office, also charging no fee as it has its own fleet of delivery personnel’s. They are promoting office goers to skip to go out for lunch rather order in online with no surge in delivery fee. 

A sharp rise in prices of essential commodities over the past few months coupled with the latest burden of steep hike in fuel rates have made life difficult for almost every section of the society across the country. But for hotels and restaurants, reeling under losses on account of the Covid-19 pandemic, fears that the hike in prices of fuel along with LPG cylinders has dealt a fresh blow to their business.