Estonian Business School

CURRENT PRACTICES OF FOOD DELIVERY

BUSINESSES IN ESTONIA TOWARDS RESTAURANTS
AND CAFÉS

Master’s Thesis

Kasim Khan

Supervisor: Associate Professor Mari Kooskora, Ph.D

Tallinn 2021

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I herewith declare that I have written the Master’s Thesis independently. References
have been indicated for all the publications, claims, opinions, and different sources by
other authors.

May 06, 2021 ........................................./Kasim Khan

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 Table of Content

ACKNOWLEDGEMENT ............................................................................................. 4

ABSTRACT ................................................................................................................... 6

INTRODUCTION ......................................................................................................... 7

1. LITERATURE REVIEW .................................................................................... 11

1.2. FOOD ORDER & FOOD DELIVERY MODEL ......................................... 16

1.4. CLOUD RESTAURANT MODEL .............................................................. 18

1.5. MEAL KIT DELIVERY MODEL ............................................................... 19

2. RESEARCH METHODS AND MATERIALS ................................................... 20

2.2. Samples ......................................................................................................... 21

2.3. Methods......................................................................................................... 22

3. RESEARCH ANALYSIS AND DISCUSSION .................................................. 23

3.1 Analysis .............................................................................................................. 23

3.1.1 Food Delivery Service Providers ................................................................ 23

3.1.2. Commission paid by Restaurants and Cafés .............................................. 23

3.1.3 Food delivery service during pandemic ...................................................... 25

3.1.4 Advantage taken by food delivery companies ............................................ 26

3.1.5 Sales outcome ............................................................................................. 26

3.1.6 Using delivery service in future .................................................................. 27

3.1.7 Complaints of food ..................................................................................... 28

3.1.8. Advertisement and Campaigns .................................................................. 28

3.1.9 New Customers via delivery services providers ......................................... 29

3.1.10 Government Involvement ......................................................................... 30

3.2. Experience food delivery service with Wolt and Bolt .................................. 30

3.2.1. Commission for food delivery services ..................................................... 31

3.2.2. Wolt vs Bolt ............................................................................................... 31

3.2.3 Exclusive contract or General contract ....................................................... 32

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 3.2.4 Helping during pandemic ............................................................................ 32

3.2.5 Government Intervention ............................................................................ 32

3.2.6 Perspective towards delivery couriers ........................................................ 33

3.2.7 Slipping loyal customers ............................................................................. 33

3.2.8 Ordering for self .......................................................................................... 33

3.2.9 Satisfaction from food delivery providers .................................................. 33

CONCLUSION ............................................................................................................ 35

REFERENCES ............................................................................................................ 37

FIGURES
1. Common online food delivery model. ............................................................. 12
2. Online food ordering model for customer relationship management………...13

3. How does fully integrated food delivery model work………………………..17

4. Cloud delivery food model…………………………………………………...18
5. Number of food delivery service providers…………………………….……..23
6. Commission charged by food delivery service providers. …………………..24
7. Food Delivery service helped in pandemic………………………………...…25
8. Food Delivery high commission charged from restaurants…………..……….26
9. Using same delivery service in future………………………………………...27
10. Food complaints from food delivery service platform……………………..…28

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 ACKNOWLEDGEMENT

Writing a thesis was a difficult task for me because I had never written one before, and
this was my first time. Coming from a different country and studying in Estonia has
broadened my horizons. This thesis writing journey would not be possible without
mentioning few people who helped me.

I want to express my gratitude to my supervisor Mari Kooskora for her guidance and
support. Her professionalism and experience were extremely beneficial to me. She
recognized my concern and offered me her professional opinion, which was extremely
beneficial to me. I am sincerely grateful for her feedback and guidance.

I would like to thank my parents for their financial and emotional support during this
journey. It has significantly helped me in my academic career and personal life. My
father, who recently passed away, supported all my decisions always encouraged me to
go beyond my limit. My father motivated me at the lowest point of my life. I will always
miss him and keep him in my prayers. I also want to thanks my siblings for their love
and support. Their encouragement from another side of the world (India) always
inspires me.

I would also like to thanks my friends here in Tallinn who were with me at my recent
hard times and helped, motivated, and cheered me to overcome hard times. They were
stood by me during research and supported me.

Finally, I would like to express my gratitude for the incredible learning experience I
have had as a result of completing this thesis.

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 ABSTRACT

Khan, K. Current Practices of Food Delivery Businesses in Estonia Towards

Restaurants and Cafés. Master’s Thesis, Estonian Business School, Tallinn 2021, 40
pages, 10 figures, 47 references, in English.

This thesis aims to highlight the current practices of food delivery service providers
towards restaurants and cafés in the Tallinn region. Particular focus on Wolt and Bolt
since the food delivery market is dominated by these two players. Due to limited
competition in the market, both delivery companies, Bolt and Wolt, try to make more
profits from their partner’s restaurants and cafes. Both companies are luring benefits
for restaurants and cafes to partner with them first and provide additional benefits if
they make an exclusive contract. I found that food delivery providers are offering more
visibility on their platform in exchange for more commission. Other benefits are
branding, consultation, exclusive offers, and many more. The downside this, both Wolt
and Bolt offer almost similar benefits and ask for high commission due to limited
competition. The food delivery market is becoming an oligopoly in Tallinn and
restaurants and cafés are the one who is paying high prices in exchange restaurants are
getting more orders but not many profits. Food delivery businesses are practicing
unethical practices that would be killing the market competition and hurting cafés and
restaurant owners, and, in the end, the customer will suffer. Here comes the question
that why companies are not following ethical practices. Why not is the government
regulating the sector? Interference of government would make new players entry easy
and make the food delivery sector competitive, and the ultimate beneficiary would be
restaurants and end customers.

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 INTRODUCTION

In the digital era, people are using digital technology in almost every aspects of life.
From buying clothes to ordering furniture, booking holidays in single touch to working
from home. Same applies for food delivery service as well. According to Singh (2019)
in an article on Forbes stated that the word "food supply" no longer has a contemporary
definition. The method of commanding food has now become simpler to heat a frozen
TV dinner, from phone orders to the use of dedicated internet networks connected to a
real restaurant. In the last five to seven years, a large number of businesses all over the
world seem to have disproved a new, and now less mysterious, magic formula, in which
previous internet food ordering services were confined to a restaurant or a menu.

Global demand for online food services is expected to rise from $115.07 billion in 2020
to $126.91 billion in 2021, with a compound annual growth rate (CAGR) of 10.3%.
Recovery from the COVID-19 findings, which previously culminated in the close
confinement of social gaps, remote workers, and economic enterprise, resulting in
organisational difficulties, is increasingly reflected in the resumption and adjustment of
operations to the current level. The global online food supply industry is expected to
reach $192.16 billion in 2025, representing an 11% annual growth rate
(Thebusinessresearchcompany.com, 2021)

Customers all over the world are increasingly adopting online grocery delivery services
via smartphones. Customers using mobile phones are now the primary internet shoppers
in the food and beverage industry, reflecting the importance of online food and beverage
shopping. Global e-commerce customers in the food and beverage sector totalled 1.5
billion in 2019 and are expected to grow by 800 million by 2024, a 25% year-over-year
rise. Zomato, an Indian food delivery website, has 80 million monthly active users with
expects to increase to 20 million in the coming years. The emergence of online food
delivery services is accelerating the increase in smartphone users and internet
penetration (Li, et al. 2020).

The cost of the supply chain and distribution would be a big factor in the online food
services industry. This price includes order fulfilment, distribution prices, business
capital adaptation to changing customer demand, and last-mile connectivity. There are

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additional costs for packaging, petrol, mileage, and hiring a driver for cardboard boxes
(Yeo, et al. 2017). The supply chain and distribution must be used to avoid spoilage of
products with a reduced shelf life. According to a Capgemini poll, retailers could lose
up to 26 per cent of their revenue in 2019 if their systems are not updated to ensure
timely delivery in place of the increased online food delivery infrastructure. Supply-
side prices, on the other hand, would stifle appetite for online food services (Yusra and
Agus, 2018).

Distribution 4.0 is a revolution in the foodservice sector that aims to modernise and
decentralise the distribution network. Distribution 4.0 puts together several partners to
provide the industry's broadest reach across urban and regional markets, focusing on
promotion, branding, and in-store products to provide shoppers with world-class
support. They would work with aggregators, e-commerce vendors, rural manufacturers,
and modern exchange dealers to increase coverage. The online giant Amazon recently
announced plans to expand its last-mile integration with a variety of independent
merchants, convenience stores, and agricultural supermarkets. Distribution 4.0 is
projected to benefit online food delivery sites as well (Gamilla, 2021).

The online food delivery segment is estimated at around 18 million euros in Estonia.
Bolt (formerly Taxify), an Estonian ridesharing and food-delivery company, recently
reported a €100 million investment from Naya Capital Management, increasing the
company's value to €1.7 billion for a total of €300 million. The funds will be used to
broaden the company's business presence in Europe and Africa (Tucker, 2020).

Bolt, which began in 2013 as a taxi-hailing service provider, has expanded to dominate
the food procurement industry in 12 countries. It has expanded to over 150 cities in
Europe and Africa, with over 30 million users worldwide (Mungadze, 2021). Bolt
announced a deal with Google in February of this year, which will increase its exposure
and include it in the Google Maps travel planner (Tucker, 2020).

As a part of the worldwide pandemic, Bolt seems to be gaining favour on global ride-
sharing platforms. Uber revealed further job losses this week, while Lyft is laid off
almost 17% of its employees. In this regard, Bolt demanded a €50 million loan from
the Estonian government, and the government now has a preservation scheme in
operation. The pandemic has passed, and the start-up has seen no significant employee

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losses or salary cuts so far. Through this €100 million infusion, the team hopes to ensure
that long-term ridesharing and food supply continue to be as, if not more, in-demand
utilities (De Cicco, et al. 2020).

Wolt is founded in Finland in 2014 and since then established their market over 20
different geographic location all over the world. Wolt started its food delivery operation
in 2016 in Tallinn, Estonia. They have enjoyed almost monopolistic market in Estonia
for almost four years and made loyal customers and good partnership with restaurants
and cafés. Their revenue increased more than 100% since launched in Estonia (Wolt,
2019).

Estonian food delivery market expected growth is above 10% year by year which is a
good indication about the industry. The two food delivery companies Wolt and Bolt
have captured most of the market share in the food delivery segment and they are
dominant players in Estonia and created oligopolistic market condition (Online food
delivery market Estonia, Statista 2020).

The revenue model of the online food delivery business for prepared meals consists of
two revenue models.

1. Restaurant to Customer Delivery

2. Platform to Customer Delivery

In the first model, a customer searches for a particular restaurant on a food delivery
platform and order the food. Food delivery companies take a commission from the
restaurant and may charge a delivery fee from the customer (Molina-Besch, 2020).

In the second model, a customer goes to the food delivery platform and looks for food
or chooses from the menu, which is customized to the customer by the algorithm. After
selection, the food delivery business charges a commission from a restaurant, also they
charge an extra commission to promote on platform advertisement fee, which may have
influenced the decision of the customer to buy from the restaurant and may charge a
delivery fee from the customer (Food delivery business, Statista 2020).

This thesis proposed current practices of food delivery businesses in Estonia towards
restaurants and cafés. What practices food delivery companies are following and in

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what terms they provide their services to their partners? Also, why current practices of
food delivery business led to practice them unethical strategies to charge them high
commission and special contract to eliminate the competition with the existing
restaurants and cafés partners thus the focus will be on the understanding the experience
of cafés and restaurants owners about their relationship with the food delivery
companies particularly Bolt and Wolt. The aim is to identify the practices in limited
competition which leads to create oligopoly market condition and what could be the
potential solutions of it. The research question is to “Identifying the current practices
of food delivery service providers towards the restaurants and cafés in the Tallinn
region that could potentially eliminate the competition and create oligopoly market
condition that would not be long-term benefits for restaurants and cafés in Tallinn,
Estonia.”

The first chapter of thesis is the theoretical framework, which consist information and
foundations about customer behaviour, oligopoly market, food delivery models, and
food delivery market. The second chapter include research method and materials used
in thesis. The third chapter is about the research analysis and discussion. This chapter
discussed about the findings and analysis of research. The last chapter provides
conclusions about the thesis and mentioned all findings and suggestion.

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 1. LITERATURE REVIEW

The growth of the internet and smartphone technology has influenced the creation of
online businesses, shopping, and e-commerce services (Bressolles, Durrieu, Senecal,
2014; Amir, Rizvi, 2017). The online food delivery business is increasing rapidly in
entire Europe. The food delivery service business would be more than €100 billion
worth by 2023, and it is one of the fastest-growing service sectors and disrupting the
restaurant sector as well (Blumtritt, 2020). Affordability of smartphones, enhancement
of telecommunications infrastructure and rising buying power, and many other factors
have forced companies to incorporate technology into business to meet the demands of
people and have allowed the online food order business model to grow rapidly (Bezerra,
Souza, Pereira, Sichieri, 2013; Machado and Pigatto, 2015). The changing habits of
consumers have helped the emergence of online food delivery business services (Chai
and Yat, 2019).

Ordering food online system is a comprehensive self-service system where it gives the
customers to control over their pace of orders, limiting the number of personal
interactions with café and restaurants (Kimes, 2011). According to Ding et al. (2007),
savings of time has become the most important priority for customers among the
motivations for adopting technology-based solutions. In decision-making factors and
processes, valuable tools are social-psychological model analysis (Ajzen, 1991).
Behavioural intention or loyalty intention is a customer’s inclination toward the
products or services of the company (Yeo, Goh, Rezaei, 2017). It is widely recognized
as the most evident tool for customer satisfaction. Behavioural intention also signals a
customer’s future prediction related to the consumption of products or services
(Suhartanto, Chen, Mohi, Sosianika, 2018). The study about the changing market of
food delivery businesses uncovered customer behaviour traits. The important factors
for customers are personalization and on-time delivery (Carsten, Alexander, Thomas,
Martin, 2016).

But the question is, food delivery business is sustainable in the future or just another
bubble. In his viral article Ranjan Roy has pointed out that food “If capitalism is driven
by a search for profit, the food delivery business confuses the hell out of me. Every
platform loses money. Restaurants feel like they are getting screwed. Delivery drivers

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are poster children for gig economy problems. Customers get annoyed about delivery
fees.” If no one is happy why should do the business? Major players in the delivery
business are incurring losses as compared to their revenue. In 2019, Doordash lost $450
million to earn $900 million in revenue, and in a similar situation with Uber Eats, they
make $734 million by spending $1.2 billion in one quarter” (Roy, Duruk, 2020).

Figure 1: Common online food delivery model.

Source: https://www.agriya.com/blog/food-delivery-process/

According to Kotler and Armstrong (2009), finding the right customers that provide a
profitable return can be defined as customer acquisition. Customer acquisition is
necessary for every company that start creating a business, expanding their business,
products and services. It is effective in situations where the switching cost is relatively
low and repeat purchases are rare. In acquiring customers, it is essential for an
organization to choose the right customers to serve before deciding how they can best
acquire them. This is particularly important as it is a fact that organizations will not be

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able to serve all customers in every way. Hence, organizations nowadays decide to
segment their customers and focus more on customers that they can acquire, satisfy best
and bring profitability (Jobber, 2010).

Figure 2: Online food ordering model for customer relationship management

Source https://www.fatbit.com/fab/build-advanced-food-ordering-delivery-website-
with-best-features/

A remarkable technique that involves creating a relationship that gives a win-win

situation for both customers and the company can be defined as Customer Relationship
Management (Baran, Galka and Strunk, 2008). Customer relationship management
involves compiling and analyzing the vast amounts of data of customers, which will
provide greater insight into the customers’ behavior. This will allow a company to treat
different customers with different actions accordingly, which enables the company to
act more efficiently and effectively while retaining its customers. This technique is
crucial in retaining customers, as without the existence of knowledge in regards. It was

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stated in the work of Timm in 2011 that a basic sense of caring, concern, and
competence plays an essential role in building customer satisfaction.

A customer that is satisfied with a service tends to be loyal and involved with repeat
purchases that lead to mouth-to-mouth promotion which will increase the company
profitability (Hill et al, 2007). Next, according to Timm (2011), customer satisfaction
occurred whenever the customers feel that the price that they pay for a certain service
is beneficial or worthy. One of the best ways for a company to provide satisfaction for
customers is by working closely with the customers to ensure the service meets their
needs and wants (Lovelock, et al., 2005). This is necessary in order to ensure the service
stays relevant and needed by the target customers and not result in defective customers.
For example, tiger airway, which is a budget airline, stays closely with their target
market, which is the price-conscious customers, by keep offering value-for-money
airline service. Next, different customers perceived value from a service subjectively.
Therefore, it is essential for a company to identify and assess the value perception of
key people that are involved in purchasing process (Hollensen, 2003).

In the end, delivery businesses are looking for customer accusation and market share to
benefit in the future. An organization needs to be very careful in designing a business
offering since creating a bid, consumers prefer to create value and loyalty preferences
dependent on market offers (Kotler, 2000). Already trouble industry, food businesses
face labours shortage, food cot, reviews, and margins are very low now they have to
take care of another problem from delivery service businesses (Lawder, 2018).

Managers are continually searching for ways to maintain a consistent flow of sales,
particularly in the current economic climate. Including a food service may be a simple
way to encourage people to sell food while still running a viable restaurant. If a
corporate plan includes food procurement, it would be easier to respond to rapid
demand shifts and build into a better role as life returns to normal (Keeble, et al. 2020).

The recent economic downturn is forcing restaurants across the world to partly shut
their doors – something that seemed impossible just a few months earlier. On the other
hand, the benefits of online food ordering help the restaurant to profit from a tough
situation. Here are a few examples of why partnering with food delivery providers can
be advantageous to businesses:

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Increase client base

One of the benefits of the food distribution app is the excellent Internet access to
delivery services such as Bolt and DoorDash, which would aid in the opening of a slew
of new restaurants (GloriaFood Tech SRL, 2021). If they partner with a third-party food
supplier, restaurants will be immediately added to the restaurant list. By merely
changing the services offered on a third-party distribution network, the restaurant will
increase incremental revenue depending on the actual preferences and budget.

Boost the online exposure

Restaurants can cut marketing costs by using the specialised marketing resources of a
third-party distribution network such as Wolt and Bolt. People will gain access to the
immense resources and quickly improve their online presence and SEO by
collaborating with platforms (Kim, et al. 2021). Restaurant managers must remember
that the figures are on their side: New consumers account for 92 per cent of all online
grocery orders. This new group of customers would use mobile apps to find the
restaurant, search the menu, and place orders.

Satisfaction of customers

Restaurant managers must aim to meet the demands of their customers to be

competitive in today's on-demand environment. When it comes to comfort, online food
checks most of the boxes. For starters, they can take time looking around and being
acquainted with the restaurant and its menu. Ordering online is also easy, with fast
checkout and delivery (Ogunsemi, 2020). When people buy from Wolt or Bolt, it takes
marginally less time to arrive than when they are not. People can also offer their
customers a range of choices, such as pick-up only, or they can catch and go in the
neighbourhood.

1.1. FOOD ORDER ONLY MODEL

For the first generation of on-demand food distribution services, the order-only model
is selected. They made the decision to link customers with local restaurants. It would
aid in broadening the scope of the restaurants' offerings. Restaurants, on the other hand,
should keep their own equipment on hand. Customers prosper because they can quickly
and conveniently order their favourite meal.

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If people just order one, they will be charged a fee anywhere from 7% to 15%. This
business model is used by a well-known food delivery systems Zomato. These are very
scalable machines, but they are only available in a few kitchens and price ranges. This
is not the only issue with the order-only model. To keep clients, the most difficult
challenge is to establish and sustain an extensive network of partner restaurants. The
premium is the primary source of revenue for on-demand food procurement
applications. As a result, the participation of as many restaurants as possible is needed.
Not to mention a diverse range of restaurant choices offers comparative edge in
proposal (Ogunsemi, 2020).

1.2. FOOD ORDER & FOOD DELIVERY MODEL

The operations for partner restaurants will be managed in this food order & delivery
model. Restaurants appreciate such networks because they remove the need for a supply
partner or car maintenance. If one wants to start a food delivery company, this model
is worth looking into. These business models bill between 20% and 30% of the direct
buying prices (De Capitani Da Vimeracate, 2019).

One can also owe the customers a flat shipping fee. Here is a Wolt example that sticks
out. Partner restaurants can appear at the top of the search page in return for
advertisement fees or extra commission. This is, indeed, one of the most famous food
supply company solutions. However, the questions it poses are unique to it. This
business model's main drawback is a systemic distribution mechanism. Customer
retention is a function of customer satisfaction and loyalty, and as a result, long-term
customer relationships are contingent on delivery time. It is much more important in
lunch orders because people do not have all day. It is an excellent service if a food
delivery app is available in 30 minutes. Customers would be dissatisfied if the lead time
were extended (Belanche, et al. 2021). To keep food healthy, it must be kept at a
constant temperature.

1.3. FULLY INTEGRATED FOOD MODEL

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Anything is achieved in-house in the vertically integrated food distribution market
model. The makers of the app source the ingredients, cook the dishes, and market them.
Individuals or companies can choose to participate. Premium customers are often

Figure 3: How does fully integrated food delivery model work

Source: https://rubygarage.org/blog/food-delivery-models-and-challenges

provided with food delivery apps in conjunction with top chefs. One representation of
one of these shows is Eat Purely (De CAPITANI Da VIMERCATE, 2019). Michelin-
starred chefs cook their cuisine.

This paradigm still has several disadvantages. The most significant impediment is a
lack of funds. If a business model is chosen, the organisation must have all of the
necessary resources. Cooling units, cooling trucks, heaters, and other items must be
included in the equipment. Increasing the order number is one way to reduce running
costs. Transportation costs will be reduced since multiple goods are delivered at the

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same time (Hoffmann and Prause, 2018). Cutting costs and shortening turnaround times
can also be supported by the use of cutting-edge technologies. Drones have the potential
to reduce delivery time and costs by up to 20 minutes. This is due to the fact that owners
are excluded from paying distribution workers’ wages.

1.4. CLOUD RESTAURANT MODEL

Business concept owners do not need a restaurant in this food distribution system. When
a customer submits an order, it is routed to a central kitchen. This is prepared in the
central kitchen and distributed by the delivery staff. Many supporters of this business
model have received significant funds in recent years.

Figure 4: Cloud delivery food model

Source: https://adamodigital.com/blog/cloud-kitchen-concep/

When compared to the other two, this business model needs less investment. The most
significant benefit is that the company is fully under your management. The services
will then be allocated to where they are needed (Kasmani and Shafie, 2021). They need
a basic application, so they operate their company without a physical appearance. Look
for an organisation that specialises in food supply applications if you want better
software. People should tailor main services to a genuine state-owned enterprise to gain
a competitive advantage.

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1.5. MEAL KIT DELIVERY MODEL

It may be a spur-of-the-moment business idea, but it is a success. Customers only need

to be served high-quality food with a range of vegetarian and non-vegetarian
alternatives. Clients will be able to choose the number of recipes they wish to receive
per week. Recipes and ingredients will be delivered as intended to customers
(Davidavičienė, et al. 2017).

From a point, all of this seems easy, but it is difficult to do because it necessitates a
team of leaders capable of developing unrivalled recipes. Second, a delivery firm will,
of course, sell the food kits. Finally, there are manufacturers that manufacture high-
quality products. No, the most significant ingredient of any formula is always
overlooked: the consumers (Allen, et al. 2017). They are people who love cooking a lot
of recipes at home. This helps you to make a lot of money for your food distribution
business plan, and you can say so with the assurance that consumers can subscribe. It
can occur at any time of year or week. It is not, however, a single instruction. Contact
the food supply software production company to see if you can implement the project.

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 2. RESEARCH METHODS AND MATERIALS

2.1. Research Method

The methodology strategy was qualitative data research approach to address the
research questions. A mixed methods study is one in which at least one qualitative and
one quantitative analysis aspect is used. The following is a description of mixed
methods study that I have used in this study (Johnson et al, 2007). The ultimate aim of
mixed method analysis, which combines both qualitative and quantitative research
elements, is to broaden and reinforce a study’s findings and, as a result ass to the body
of knowledge. Mixed method analysis use in all experiments to help address the one
research question (Johnson and Christensen 2017, Onwuegbuzie and Johnson 2006).
Greene, Caracelli, and Graham first proposed a common classification of mixed
methods research uses in 1989, based on a review of reported mixed methods studies.
The categorization is still in use today (Greene 2007). The below mentioned fives
reasons for mixing methods research were identified.

1. Triangulation seeks convergence, corroboration, correspondence of results from

different methods.
2. Complementarity seeks elaboration, enhancement, illustration, clarification of the
results from one method with the results from the other method.
3. Development seeks to use the results from one method to help develop or inform the
other method, where development is broadly construed to include sampling and
implementation, as well as measurement decisions.
4. Initiation seeks the discovery of paradox and contradiction, new perspectives of
frameworks, the recasting of questions or results from one method with questions or
results from the other method.
5. Expansion seeks to extend the breadth and range of inquiry by using different
methods for different inquiry components.

This thesis is about understanding food delivery provider’s impact on restaurants and
cafés in Tallinn region. What problems they are facing and practices of food delivery
service providers in Tallinn, Estonia. Thus, the focus will be on understanding the
merchants or owners of food outlet's side of the story, their partnership with food

20
delivery companies, their benefits and loss after partnering with food delivery service
providers.

2.2. Samples

In the collected responses and collected data represent the cafes, restaurants, and small
eating outlets in different regions of Tallinn, Estonia. Responses or data were collected
from different method of collections. Due to covid-19 many restaurants were hesitant
to meet in person also few restaurants were quite busy during daytime and were only
able to provide response in free time. The multiple method or ways used to approach
target audience which includes in person, using social media platform, handing QR
codes, sending survey link via application like WhatsApp, Facebook messenger, and
Gmail, phone call, and distributing survey forms. 30% responses came via survey forms
distributed mostly in Baltijaam Turg, Tallinn. 25% data collected via meeting in-person
and handing them survey and asked them pop-up questions during data collections to
restaurants and café owners mostly in Old Town of Tallinn. 20% responses received
through survey link sent via WhatsApp, Facebook messenger, and Gmail to target
audiences. 15% data received from social media platform Facebook where their
representative provided answers to questions after shared survey link. 10% responses
collected by calling to specific restaurants and particular time and collected audio of
the questions asked. No responses received from handing QR codes. 50% restaurants
are in business over 5 years and 40% of responders are in business between 2 to 4 years.
5% are in food business between 4 to 5 years and 5% food business open within 1 year.
45% restaurants are start using food delivery service 2 to 3 years ago and 40% start
using services 1 to 2 years ago. 10% food outlets started using food delivery service
over 4 years ago and 5% started using within a year ago. The responders were in
different regions of Tallinn. 25% responses received from Old Town followed by 20%
each from Baltijaam Turg and city centre and adjacent areas. 15% responders were from
Telliskivi and 10% each from T1 mall and Narva mnt. 42% responders were between
29 to 35 years old and 32% were between 36 to 45 years old. Remaining were between
18 to 28 years old. Most of the restaurants were Asian cuisine types which include
Pakistani, Indian, Chinese, and Nepali foods. Few were Kebab and Doner food outlets
and remaining were café and fast-food joints.

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2.3. Methods

The data collected via using a Google form and semi-structured interview style via
audio applications like WhatsApp call and Skype and personally meeting with food
outlets owners or merchants. The semi-structured interview style used to understand
the story about their partnership with food delivery companies and their opinion about
it. The sample size was small due to covid-19 pandemic as merchants were not
confident to provide interview and information. Total twenty responses were collected
from cafés and restaurants situated in Tallinn Estonia. The population are café,
restaurant owners, and food outlet merchants, who have been or who are currently
partner with food delivery companies or using or used their services. Enrichment of
data quality, selected individuals were based on the same region. The differences in the
profile are based on the type of restaurants, location, size of the food outlets, popularity,
unpopular, and newly start. The questionnaire consisted total 46 questions divided into
three parts. Part one consists of fifteen questions basic food delivery questions. Part two
include fourteen questions regarding their experience with food delivery services and
part three include seven questions regarding personal information. Apart from that pop-
up questions were asked about over all experience and casual conversation happened in
which they have used strong words to describe their relationship with the food delivery
services.

22
 3. RESEARCH ANALYSIS AND DISCUSSION

Thesis research survey and interviews were divided in two part to understand the
current situation. The first include information about their current food delivery service
providers particularly with Wolt and Bolt as both companies dominate the Estonian
food delivery market. The second part was to understand experience with food delivery
service providers.

3.1 Analysis
3.1.1 Food Delivery Service Providers
In Estonia, many companies provide food delivery services, but market is mainly
dominated by two companies Bolt and Wolt. There are new players in market like
Ziticity and others but most of the share is captured by the Bolt and Wolt. The current
food delivery market situation is oligopolistic. As shown in figure 5. most of the people
are using only two food delivery companies.

Figure 5. Number of food delivery service providers

3.1.2. Commission paid by Restaurants and Cafés

By 2024 the global food delivery market will be valued more than $100 billion and
commission is the main source of revenue for the food delivery company. The revenue
model includes delivery fees from customers if the order is small and main income
come from commission charged from restaurants and cafes. Wolt food delivery started
in 2016 and charged 30% commission from restaurants and after some complaints and

23
feedback from restaurants they reduce their commission to 27%. From 2016 to summer
of 2019 Wolt enjoyed monopolistic market because only small players were existed

Figure 6. Commission charged by food delivery service providers.

who were specific to restaurant like Dodo pizza deliver. In summer of 2019, Bolt has
started its food delivery business and charged 20% commission from restaurants. After
grabbing market share, they started to increase the commission. Now both Wolt and
Bolt charged commission between 21% to 25% but there are few restaurants who pay
above average commission. Apart from that both companies run campaigns on their
platform to advertise restaurants or café and additional commission for that between
5% to 10% depend on type of campaign, time and overall duration of campaign. It is
quite hard for small and medium restaurants to keep up with franchise like MySushi or
McDonald who almost participate every campaign to grab more customers. After
paying commission 90% restaurants were able to make very low margin profits between
6% to 9% on average almost 10% are not able to make same. After asking them about
why them are still using the application, their responses were to run the business
because covid-19 is also one of the factors they are not able to earn the profit also they
are expecting to earn some profit in coming season and may recover loss as well.
Overall, all the restaurants are paying very high commission and they all think that the
commission should be reduce so that can make good profit to survive for long term.

24
3.1.3 Food delivery service during pandemic
Pandemic played a very big role when comes to adoption of digitalization. In Romania,
employee’s adoption of digitalization for work has been increased more than 50%.
Similar story can be seen all over the world. During the pandemic in 2020 the revenue
of food deliver businesses has been double in USA, companies like UberEats, Grubhub,
Deliveroo, and others had seen tremendous growth in USA and around the world. In
Estonia, same thing happened as well. When asked about the “whether delivery
companies helped during corona times” 90% responses were yes and 10% were not
sure. The responders provided multiple reasons why they think in that way. Responders
who said yes think that due to pandemic people were ordering from home and they were
afraid to visit to restaurants and having option of food delivery made restaurants to
survive in pandemic. Also, most of the responders blame government for the covid
restriction that allowed them limited options and no dine options. Few responders think
that food delivery companies have helped them to reach more wider customers as they
have large data and customer reach. Behaviour of customers have changed as well as
most customer start ordering from home or office which save them time, available wider
options, and money but as mentioned all think that delivery companies helped because
they do not have any other option and kind of depend on food delivery companies.

Figure 7. Food Delivery service helped in pandemic

20
18
16
14
12
10
8
6
4
2
0
Yes No Maybe

Response

25
3.1.4 Advantage taken by food delivery companies
The current delivery market situation is oligopolistic. An oligopolistic market in which
companies complete on prices and quality of product and services. Consumers have
different levels of knowledge, some customers are aware about both companies’
products and services, some know only prices, and some prefer quality but if market is
oligopolistic, it is not good for consumers. Prices can be set between market players
and consumer pay high prices for product and services. The similar situation is also in
Estonia. Both Wolt and Bolt averagely charge commission between 21% to 25% and
charge additional commission on promoting and participating in campaign on their
platforms. When asked the questions “Do you think food delivery businesses are taking
advantages?”. 75% responders said “yes” and said charging high commission basically
put their businesses on toes and they are hardly making a profit. They mentioned about
capitalism and oligopolistic market situation where they are only depended only two
food delivery businesses Wolt and Bolt. 20% responders choose “maybe” as they are
not sure whether in current pandemic situation, they have limited options and
mentioned high commission charged from food delivery services. 5% responders
choose option “no” as they think its food delivery business model and it is working fine
for both restaurants and end customers.

Figure 8. Food Delivery high commission charged from

restaurants
16
14
12
10
8
6
4
2
0
Yes No Maybe

Response

3.1.5 Sales outcome

As mentioned above, during the pandemic overall market see a high growth food
ordering and same applies for the Estonian market as well. When asked about “Do you
receive more orders after using food delivery services or not?” almost 95% responders

26
said “yes”. On average restaurants and cafes orders have increased 50% and some
reported growth more than 100% in food orders. Only 5% think that their food orders
have declined after using services. Overall, almost all participants see high growth in
food sales after using food delivery services Wolt and Bolt.

3.1.6 Using delivery service in future

After seeing increment in food delivery orders, we have asked two questions “Have you
plan to start your own food delivery system?” and “After the corona end, would you
still use food delivery services?”. We have received mixed reviews for both questions.
When we asked about their future plan for food delivery services, 45% responders said
that they are planning to start their own food delivery as current food delivery
companies charging very high commission and asked extra commission if they
participate in marketing or promotion campaigns. 35% responded that they will not start
their food delivery as it is expensive, and they have limited resources to start their own
food delivery services. 20% responders were not sure whether starting their own food
delivery service would be a wise option or not, but they open for the idea to start own
food delivery service.

Figure 9. Using same delivery service in future

After the pandemic end, 80% responded that they will use food delivery services from
both companies Wolt and Bolt. Their sales increased above 50% and most of the
restaurants are making profits. Their overall profit increased after using the food
delivery services. 15% responded that they might use the service but unsure as profit

27
did not increase as expected. 5% clearly stated they will not use the services and will
stop using current food delivery services are pandemic end.

3.1.7 Complaints of food

After using the food delivery services whether they received complaints about their
food or not. To find that I have asked “How often do you receive complaint about your
food whether it’s cold or missing something?”. The reason for asking is to identify that
their food complaints increase or decrease, and most obvious reasons were like missing
food, wrong packaging, arrived cold, and many more. 45% responders said that they
received complaint rarely and most of time about food is cold. 35% responded that few
times they received complaint from customers from the portal about their foods. 15%
said they received sometimes specially during winter season and peak time in a day.
5% responded that they always received complaint about their foods, and they are not
happy with the food delivery services and would be more likely to discontinue after
pandemic end.

Figure 10. Food complaints from food delivery service platform

Always

Often

Sometimes

Few Times

Rarely

0 1 2 3 4 5 6 7 8 9 10

Responders

3.1.8. Advertisement and Campaigns

Another source of revenue for food delivery services are charging extra commission of
visibility of the restaurants and cafes on their platform. Wolt and Bolt run multiple
campaigns on their platforms like 0 delivery fees, 50% off on entire menu, buy1get1,
and many more. Customer is always inclined towards the best offer for him or her. It

28
was surprising to see the customer reaction towards the question “How often you get
offer from food delivery services? And Do you pay for advertisement on food delivery
platform?”. Advertising and branding create visibility among the customers for any
product or service. Marketing is essential part of increase the sales of a product. We
have asked about the marketing on food delivery platform surprisingly 50% said they
are not paying for the advertisement on the food delivery platform. The reason they
have mentioned that they have limited budget and cannot spend extra marketing. Most
of them mentioned that they have in house marketing or they have marketing team who
create visibility and awareness also they do self-marketing of their restaurants and café.
Few of the responses highlighted that it is very expensive to promote on food delivery
platform and they ask for extra commission per food order received via their platforms.
50% responders mentioned that they are paying for the visibility on the food delivery
platform. The reasons were many to promote their restaurants like create visibility,
capturing new customers, promoting some dishes or food, and others. They have
mentioned that they pay around between 5% to 10% per campaign and sometimes it
depends on whether they want to participate in the campaign or not. Big food chain like
MySushi and McDonald can be seen participating in every campaign run on both Wolt
and Bolt platforms. Asking about how often they get offer or participates, 55%
mentioned monthly as they make budget every month in advance to promote on
different channels, 25% mentioned weekly with high budgets and more visibilities. 5%
responder participants always in campaign and about the same 5% responder
participants in quarterly, half-yearly, and once a year.

3.1.9 New Customers via delivery services providers

Food delivery services help restaurants to reach customers beyond their limited
geographic location. A customer sitting on other side of a city can order from the
restaurants located on another side. When we asked, “How often you get new
customers?” 40% responded that they always or daily get new customers from both
application Wolt and Bolt. 35% said often new customers order food from their
restaurants and 20% said that sometimes they get new customers and 5% said
occasionally they received order from new customers. All the restaurants and cafes get
or getting new customer either daily or sometimes after using the food delivery service
from Wolt and Bolt. Food delivery services helped restaurants to reach potential
customers and market.

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3.1.10 Government Involvement
Food delivery sector is not a new concept and not new in market. It used to be very
small segment and sometimes it was considered as part of hospitality or restaurant
sector. After the innovation in technology, this sector made itself separate and big.
There are many big players all over the world like UberEats, Zomato, Deliveroo,
Doordash, many others big food delivery service companies with revenue over $500
million. Since the sector increased in recent years many believe that it is time that
government should make separate rules and regulations and start monitoring this sector
as well. When asked “Do you think that government should come up with some rules
and regulations?” 45% responders said yes that it is the time now that government
should intervene in this sector and make soe rules in favour of restaurants and food
outlets. 40% believed that government should not intervene and leave this sector as is
it. This sector is growing without government intervention and rules. 15% responders
were unsure whether government should make rules and regulations or not. They
believed that it is not the right time as this sector is still growing. Food delivery sector
is not much organized sector. Asking questions about “Do you think that government
should organize this sector?”. 40% believed that yes, the food delivery sector needs to
be organized by customer to make it competitive. 35% said no, this sector should not
be organized due to lack of development and few players. 25% responded maybe as
they fear that after government involvement it would limit the scope of innovation in
this sector.

3.2. Experience food delivery service with Wolt and Bolt

Current food delivery service provider both Wolt and Bolt have different at the same
time similar service to offer to restaurants and cafes in Tallinn, Estonia. All the
restaurants and cafes explained their experiences with both the service providers. We
have asked multiple questions about them from restaurants and cafés. “Do you think
fees or commission it is justified?” the purpose was to understand whether they realised
that they have been paying high fees to opt the delivery services. Another question was
“Which delivery platform provide better services?” since there are only two food
delivery providers in Estonia, it was valuable to understand who provide better service
and who have area to improve. Pandemic has changed the way of life. When asked

30
about “How did food delivery company, helped you to increase your sales? What did
they ask you in return?” the responses were surprising. Government plays a big role to
save the local or domestic businesses from capitalization. When asked about “Why do
you feel that government should intervene?” Government can help to organize the
sector and can make regulations in favour of local restaurants owners. Couriers
represent the food delivery providers, and their behaviour can increase or decrease
brand reputation. Asking question about “What do they feel about delivery agents and
their behaviours”? their responses were more positive but not related to courier
companies. When asked questions about “Do you think that you lost or losing loyal
customers?” and “If they have ordered food for themselves” responses were brief. The
last question was about “Overall satisfaction with food delivery service”? to know
about after many flaws if they still feel satisfied with the services or not.

3.2.1. Commission for food delivery services

As mentioned above, all the restaurants believed that their current commission charge
or fee which between 21% to 25% without any promotion on platform from both Wolt
and Bolt are very expensive. They are earning minimum profit and for small restaurants
it is not sustainable for long term. All restaurants mentioned that they should reduce the
commission. There are some restaurants mainly the bigger one who mentioned that the
commission is justified and if they cannot afford should not put their restaurants on the
food delivery platforms. They believe that they are providing the services that helped
them to increase their sales and presence in the market. The third question was “Did
you get personalize service or general?” many restaurants reported that food delivery
companies have asked to sign exclusive contract, but they asked for additional
commission for it. I wanted to know if they offer service to everyone or selected
restaurants.

3.2.2. Wolt vs Bolt

There are multiple food delivery services in Tallinn but mostly are limited to single or
few restaurant deliveries as mentioned above like Dodo Pizza and major players are
Wolt and Bolt. Wolt started few years early and captured most market in Tallinn and
Bolt started in summer of 2019 but in short spam compete with the Wolt and captured
market quickly. When we asked above questions surprisingly all restaurants prefer Wolt
or said Wolt services are much better than Bolt. Especially focused on the Wolt

31
customer services and provide information that they personally prefer to order food for
themselves from Wolt application due to their fast customer service. Few have
mentioned that in beginning Bolt was better because of their marketing service but Wolt
is much better with their client services.

3.2.3 Exclusive contract or General contract

When asked about the personalize services, few responders said that it depends on if
they want to participate in campaigns or not also if they give you personalised services
in return, they will ask you more commissions. Most of the responders said that they
get general services and just pay commission as agreed. Few responders mentioned
about exclusive contract in which restaurants would be forbidden to use another
delivery provider services and in exchange visibility on platform participation in
campaigns.

3.2.4 Helping during pandemic

Indeed, food delivery companies helped restaurants to increase their sales as their
revenue is mostly depend on it. If restaurants owners are not happy with the services,
they would cancel the contract with food delivery service provider and look for some
other options. As mentioned above all the restaurants saw growth in their sales and
orders. Responders mentioned that providing a single platform to end customers helped
restaurants some visibility and another responder mentioned that having a huge data
base of end customers helped restaurants meet desire of end customers. Providing
exclusive contract specific to each restaurant to increase their sales and visibility on
their platforms and opportunity to participate in multiple campaigns also helping to
increase sales. Small fraction of responders believes that both Wolt and Bolt did help
them and took advantage of their dominance. Responding about second part of the
questions, all have mentioned high commission or extra commission.

3.2.5 Government Intervention

As mentioned above almost 50% people believe that government should intervene to
organized food delivery service sector. People believe that currently food delivery
service provider can charge commission as they wish for which is quite high and in
future, they can eliminate the competition and would increase the commission. Due to
pandemic majority of restaurants are depends on their platform to sell their foods and
beverages and they are taking advantages by charging commission and extra

32
commission for promotion and visibility on their platform. Most responders mentioned
that government should regulate the high commission percentage. 50% responders
mentioned that government should not intervene, and their arguments were that this
sector is to cater the end consumers and if end consumer is happy, they should not
intervene, but they also said that more players need to be enter in this sector to reduce
the commission charged by food delivery service providers.

3.2.6 Perspective towards delivery couriers

Delivery agents or couriers are backbone of food delivery sector. They are the one who
collect bring your food to you and they work day and night especially during pandemic,
delivery agents or courier make sure that you receive your ordered food. Asking about
their behaviour all responded provided similar answer that they are good people, polite,
nice, and their behaviour is good as long as they work in legit manner. Most of the
couriers are foreigners especially third world country. In Wolt almost 20% to 30%
couriers are foreigners and in Bolt number slightly high. Many couriers are high school
and university students since Wolt and Bolt provide opportunity to flexible work.

3.2.7 Slipping loyal customers

The reason behind asking above questions to identified whether customers are leaning
towards discounts and offers or not. Few responders mentioned that yes, they are losing
customer and they believed that offers and discounts are one of the main factors as they
were unable to compete with big food outlets and have limited budget, but many
responders believe that they did not lose loyal customers and those customers are still
preferring their food outlet or their food over other and they are still loyal customers.

3.2.8 Ordering for self

Many people include couriers and restaurants owners and workers used Wolt and Bolt
to order food for themselves. They believe that it is convenient and somehow it saves
money as well. Couriers order food for themselves and many times received delivery
for their own food. By doing so they save money, time, and get food. Restaurants did
or doing it to increase their visibility on the platform and they like to do it.

3.2.9 Satisfaction from food delivery providers

Almost all responders provided positive response that they are happy with the services
provided by Wolt and Bolt. They believe that services can be better, but they are happy

33
as their sales increased. There were few responders who mentioned that Wolt and Bolt
are lazy, and they are not happy with the current services. I believe the main reason
could be high commission that they pay for using their platform, but majority of
responders were / are happy with the services they received.

3.3. LIMITATIONS

The research has shown a picture of current practices towards restaurants and cafés by
food delivery providers like Wolt and Bolt. The results from the study have
demonstrated overall findings of the Tallinn food delivery market but not the complete
picture. The research has few limitations, which limit the overview about the restaurants
and cafés food delivery business.

Only 24 responses were received through various methods like calls, handling survey
forms, QR codes, etc. After eliminating outliers, 20 responses were considered in this
report. The number of responses was significantly less and predicting results from few
responses made out hard to predict. The participants and responders did not provide
overall pictures and pain areas as mentioned in the surveys. The survey forms were not
filled out completely or detailed by the responders. During the interview, responders
were hesitant to provide details of commission and some financial data also when asked
about the experience on record, they have said positive or not so lousy response about
food delivery providers, but off the record, they said many negative things and told us
they are not happy with the customer services and commission. Due to lack of proof, I
was not able to mention it in this report.

Another limitation was that most responses received were from Asian cuisine-based
restaurants, and they were all foreigners who were doing business here. Most of them
do not speak local languages. This research also limits the result as this shows the
picture from one side does not provide the concept of overall segment or sector. Overall,
by eliminating the hurdles, the outcome has revealed some surprising facts about the
food delivery service provider's practices towards restaurants and café in Tallinn.

34
 CONCLUSION

This paper has examined the results of the research to find out the current practices of
food delivery service providers especially Wolt and Bolt towards Restaurants and Cafes
in Tallinn Estonia. I have conducted survey and took personal interviews of restaurants
and cafes owners and found many findings which is not in favour of food outlets.

Technology made our life easy in every scenario and in food delivery business it is true
for all service provider, end customers, restaurants, and cafés. Our research has shown
that for restaurants and cafés it is becoming necessity to register with food delivery
service provider as they have ability to reach more customers due to their services.

My research has shown that one of the main concerns is commission that owners of
restaurants and cafes pay to food delivery service provider. They are paying high
commission between 21% to 25% to use their platforms. If they want to promote or
advertise, they need to pay additional commission for that which is concern for them as
they are hardly able to make profits. The other finding was that due to covid 19 it is
became mandatory to them to use food delivery services and restaurants and cafes
owner do not have many options to sell their food. Customers are avoiding visiting the
food outlet due to government restriction and pandemic. Also, WFH or work from home
made habitual to customers to order food from home as they do not need to dress up
and drive to the place. By simply staying home they can order their favourite food
online with the help of food delivery service application. Also, to make this habit more
permanent, food delivery service providers offering lucrative discount and benefits like
free delivery and many. Almost all restaurants have seen rising in their order and foods,
but they are not able to earn much profit. Restaurants and cafes getting new customers
almost every day but losing other customer as well due to offers from competitive
restaurants.

Surprisingly, Estonian restaurants owners do not want that government should interfere
in this sector and regulate this sector, but non-Estonian’s owners want that government
should interfere and make some rules and regulations especially regarding the
commission and service charges by the food delivery services.

35
Food delivery services would become essential in future as people are developing habit
to eat at home also another situation like current pandemic showed in demand surge of
food delivery services. They should reduce commission or service fees else they may
face some boycott from restaurants and cafes owners, but this would be applicable after
the pandemic end. Overall, technology innovation in food delivery brings jobs and new
opportunities for restaurants and cafes to reach customers beyond their geographic
limitation also increase their food demand and profit but it also increases their budget
and less growth in profit. Restaurants need to keep up with customers trends and need
to find solutions to high commission charge from food delivery service provider.
Government should interfere to save the restaurants and local culture by promoting
more dine-in and explore local cuisine by visiting cafes and restaurants and they should
regulate food delivery sector before it become more few players dominant and should
allow opportunities to enter new players in market. As new players will enter in the
food delivery segment, commission would reduce as well also end customers will get
more benefits.

36
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