Delivery services in Luxembourg criticise Wedely’s wage practices.It remains to be seen whether or not newcomer Goosty will respect the social approach it puts forward. Photo: Shutterstock
Goosty has just launched its delivery platform for restaurants in Luxembourg, trying to stand out from the competition thanks to its technology and social approach. However, competitors seem sceptical.
With the closure of restaurants under the new covid-19 restrictions, the food delivery sector is more than ever stimulated, as much as it is observed under the magnifying glass. In Luxembourg, as in other countries, its practices and the proliferation of its actors are a recurring topic of discussion. While the market seems to be increasingly dominated by the Wedely brand in late 2020, a small newcomer has decided to launch…
Techno and social responsibility
This novice in the world of delivery services is Goosty, a very young company founded at the dawn of the first confinement by three business school friends: Hadrien Branca, Alexandre Mithouard and Alexandre Roderich. The basic idea was quite different, as the founders told Delano’s sister publication Paperjam: "We wanted to create a 'ghost kitchen' that would bring restaurant owners who had stopped their activities –-temporarily or permanently-- together in the same kitchen dedicated to delivery meals. This is a model that works well in major European cities, but which we eventually failed to implement in Luxembourg."
A fertile ground that pushed the three partners to rethink their economic model, even if they are keeping the initial idea in mind for later. They therefore decided to launch a new delivery service, with two main advantages to stand out from the competition: a high-performance application, which other Luxembourg services are missing, and a more "social oriented" approach". "Our commission is 19%, which is much lower than the more or less 30% of major international groups and our local competitors."
But this social approach, inspired, according to Roderich, by the curriculum given in his business school, also extends to his pool of delivery workers, as he points out: "Our delivery agents are not employees and are therefore largely independent service providers, as in many delivery services, but we make a point of providing them with efficient and organised schedules according to the needs of the platform as well as creating a team spirit. We know them and they know us, and the confidence factor is really important to us."
Exclusivity as the main obstacle
Although the trio already has a number of very popular restaurant references in its portfolio, such as Bazaar, Scott’s, Strogoff, Mamacita or Brasserie Schuman, the entrepreneurs are aware that the subscription conditions for many businesses with competing services, and in particular Wedely, which sometimes includes exclusivity clauses and penalties in case of departure, prevent them from freely joining the Goosty platform. When asked about this, Wedely management did not want to comment.
Cost-effective and legal, a complicated equation
Other players in the sector are closely monitoring the arrival of this newcomer. This is the case of Foostix, who has difficulty believing in a socially-responsible concept with independent delivery companies. The service had to abandon its meal delivery system at the end of 2019, because, "by respecting the law, which allows to work with freelancers in a very restrictive way, it is impossible to be profitable," stated Foostix founder Marc Neuen. "We should have asked for more than five euros per delivery and more than 30% commission." So, "the arrival of new players pushes us to relaunch our current actions", he says, in reference to a request made to the ITM to check employment contracts in the delivery sector. "We haven’t relaunched yet, but it will happen soon," he says.
Labour minister Dan Kersch (LSAP) had already announced on RTL that complaints had been filed in 2018 and 2019. "A number of controls have already been carried out by the ITM. For example, I have heard that seven files have been forwarded to the public prosecutor’s office and that intensive work is being carried out on them. It seems that we are dealing with an important case – even if the presumption of innocence must be invoked--of circumvention of labour law. And the ITM must react."
Since the end of 2019, Foostix no longer offers delivery, but still connects customers and restaurants on its platform. Its 10% commission includes online transaction fees and the loyalty program, and it ensures that no exclusivity is requested from institutions. While it "lost half of its traffic from one day to the next," the high demand during the crisis helped it to return to its level with between 150 and 160 partner restaurants. It saw a peak of +30 to 50% demand in April, which has fallen since but has been returning recently with the second closing of the hospitality sector.
Despite an expected decline in sales in 2020, which stood at "above half a million" in 2019, Marc Neuen says that "yes, the new business model works." The site has recently been redone, in order to leave all possibilities open.
Everybody wants an app
The example of Grouplunch, which claims to be profitable by working with about thirty delivery workers, all on permanent contracts, could give a wrong turn to the economic calculations of Foostix. Its CEO, Pierre V. Pereira da Silva, explains it through investments in technology, "including an order consolidation system," and a large volume with "thousands of orders per day."
For several years the group had specialised in corporate delivery, but it has changed ideas considering the increase of telework in light of the health crisis, which has caused demand to fall (by nearly 50% at the moment, even if this figure fluctuates enormously). It launched a beta version dubbed Foozo, its delivery platform for individuals, in July. Both should be integrated on the same site, Foozo.lu, before the end of the year. It wants to be "mobile-friendly," while waiting for the launch of an application "during 2021."
An offer similar to that of the new Goosty. "We are keeping an eye on this. It is true that weare operating in the same field. On the other hand, our platform is the only one in Luxembourg that allows you to order from several restaurants in a single order, free of charge," comments da Silva, who highlights the "quality" argument to stand out. "The service we offer is of a high level. This explains our success in the corporate market", adding that “there is also the aspect of social and environmental commitment. This is a very important differentiation, because Goosty uses the Kleenex delivery technique, just like Wedely, by paying according to the task." "Having humans as adjustment variable seems like a model with no future" he says.
At Foozo, the commission is 30%, without an exclusive contract. But the business offers a near exclusivity to its restaurants, "with for example no more than two or three Italians. So everyone has more customers and is sure not to lose money by only delivering four or five orders a day." There are 30 in total, of which only a third are present on both platforms, Foozo and Grouplunch. A figure that da Silva hopes to see rise to 50 at the end of the year, thanks to an expanding delivery market, in order to catch up with the fall of corporate. At the moment it is "difficult" for him to estimate his turnover for 2020, whereas it was €3 million in 2019 in Luxembourg.
This article was originally published in French on Paperjam.lu and has been edited and translated for Delano.