It’s known that the COVID-19 pandemic was the perfect storm for on-demand food delivery firms. Restaurants were forced to rely on these companies to maintain the business amid restrictive circulation policies. The fallout? An outstanding momentum for iFood, Brazil’s leading food delivery app (that now presents itself as “a food-ecosystem partner in Latin America“). The company has reached a new milestone of 60 million monthly orders.
iFood announced on Friday that it grew 100% in one year; more than 110,000 restaurants signed up for the platform during the last 12 months. In March alone, the most lethal month in the pandemic for Brazil, 270,000 restaurants operated with the iFood platform.
In the first three months of 2021, more than 30,000 new restaurants, groceries, and convenience stores were registered with iFood‘s platform, mostly small and medium businesses.
The service that all e-commerce firms are after: on-demand grocery delivery
Between March and October 2020, the number of companies opening in the food-delivery sector in Brazil surpassed that of retail trade compared to the same period of 2019, a 26.3% growth against 12.3%, respectively, according to data from the country’s Internal Revenue Service. This is just one of the numbers that emphasize why large traditional retailers like Magazine Luiza and B2W (Americanas.com’s owner) are also announcing more investments in the supermarket category. Grocery delivery brings frequency, which is strategic for creating recurring customers.
Recently, Fred Trajano, Magazine Luiza’s CEO, stated that he sees food, beverage, and hygiene delivery category accounting for half of Brazilian retail in the future – according to him, the current digital penetration of this category in the country is only 1%.
iFood knows about this vast potential of on-demand groceries. It has been boosting iFood Mercado, its grocery and ultra-convenience delivery service. Currently, it has more than 5,000 retail partners between markets and convenience stores, an increase of almost 420% compared to March 2020.
This iFood’s relatively new delivery category has tripled its footprint across Brazilian cities during the last twelve months and reached more than 400 municipalities. From June 2019 to March 2021, around 150 million items were ordered via iFood Mercado.
Since December, iFood has also been investing in its ultra-convenience service: deliveries in up to 10 minutes. For this modality, the app has 4,000 partners operating in more than 300 cities.
iFood to the rescue of its partner restaurants: $720 million in receivables; $100 million in loans
As the pandemic in Brazil reached its peak and restaurants were struggling, iFood, Uber Eats, and Rappi announced measures to reduce and even exempt the fees of their partner restaurants.
iFood’s new package to aid partner restaurants included an automatic reduction of fees: moving from 23% to 18% in fees for those that operate via iFood’s full-service delivery (platform logistics) and from 12% to 11% for restaurants that operate in the marketplace that handle their own deliveries.
In the next three months, iFood said it will anticipate nearly $720 million in receivables without any financial cost for its restaurant partners. Since April 2020, this amount has surpassed more than $2 billion in advance transfers to increase partners’ cash flows during a period that restaurants could not provide in-house dining.
The company also offers credit lines with special rates and conditions through iFood’s new bank for restaurants that are already lending via its digital account, launched last November. It has the goal of offering more than BRL 500 million ($100 million) to restaurants during 2021. Its competitor Rappi says that it will lend BRL 100 million (nearly $18 million) to its over 200,000 partner restaurants throughout this year.
“For millions of consumers, delivery was something that referred only to the weekend’s pizza. But, during the pandemic, many customers realized that iFood is much more than that. We are a company that supports digitization and partners with restaurants and supermarkets to maintain their operations. The key to growth in our sector is the ability to provide a great service, and we are obsessed with that. We invest a lot in technology. We have more than 1,000 engineers thinking day and night about how to improve delivery,” said Diego Barreto, CFO and Chief Strategy Officer at iFood, in a press statement. From the final customer side, iFood recently won the Reclame Aqui (customer complaints platform) award, given to companies with the best customer service indicators.
“We observed a change in the frequency of restaurant orders: a 533% increase of orders in breakfast hours on weekdays in a year-over-year comparison from March 2020 to March 2021. And, on weekends the increase in the same period was 468%. Another moment to be highlighted was the increase in orders for dawn snacks during the week, which also jumped 44% in those months,” said Barreto.
A critical issue: iFood’s couriers
Worldwide, companies like Uber and iFood, which use third-party providers like drivers and couriers, face debates over gig-worker benefits. Last year in Brazil, couriers from the main delivery apps in the country took over the streets of major Brazilian cities to claim better working conditions.
iFood says it has been taking care of its partner couriers. According to the firm, in 2020, more than $20 million were allocated to guarantee these workers’ health protection, with initiatives such as the Solidarity and Protection Funds. In case of contagion by Sars-Cov-2, both allow them to stop working and receive an amount corresponding to the average earnings they had through the app in the last 90 days.
The company claims to have served around 4,000 active couriers with these initiatives in one year, with a value destined for this coverage of almost BRL 30 million. In addition, BRL 83,000 were invested, according to iFood, in the distribution of PPE kits (with hand sanitizer and mask) or the form of financial aid for the acquisition of these items.
According to the firm, in the last two years, the company claims that it has doubled the level of satisfaction of the delivery partners working on the platform, with the approval of eight out of 10 partners.
“Delivery people are key partners, and that is why we never stop supporting them. We want to evolve in our initiatives and improve our relationships with our couriers even more. Our focus is to positively impact the lives of iFood’s delivery partners, so we are open to dialogue with them, and we are in favor of new regulations that understand and better address the specifics of the New Economy and how to benefit all parties involved,” said Barreto.
iFood stated that the earnings of delivery partners who work using the iFood platform also showed growth. It stated that in January, the hourly wages of available couriers were 83% higher than the minimum wage per hour (currently around BRL 5).