PIF’s Noon.com launches into competitive food delivery sector

* Founder Mohamed Alabbar says restaurants ‘held to ransom’ by providers

Published 02 Feb,2021 via Arab News - Economy - JEDDAH - Noon, an online platform backed by Saudi Arabia’s Public Investment Fund (PIF) and Dubai businessman Mohamed Alabbar, announced on Tuesday it is planning a major launch into the region’s highly competitive food delivery sector.

Speaking in a webinar, founder Alabbar promised to give the food industry a fair structure to operate in, something that he said other service providers ignored. He added that the existing competition charge high commissions that exert a toll on food and beverage operators’ already tight finances.

Noon Food announced it that will only charge outlets 15 percent of the total order value, including delivery, and two percent on payment, totaling 17 percent commission on each order.

Noon said that it will commit to these numbers for the next two years.

Alabbar said restaurants were being “held to ransom” by rival aggregators during the pandemic, adding that many operators had been charging about 30 to 35 percent commission for delivery services.

“We will not allow anyone to hold you to ransom, we will fight on your behalf,” he said.

The Noon announcement comes hot on the heels of the launch of Kitch, another food delivery service launched in Saudi Arabi and the UAE by Dubai-based businessman Walid Hajj and Saudi entrepreneur Fahad Alhokair. (Supplied)

Noon also offered restaurants an opportunity to reduce commission to 12 percent for the first six months if they drop menu prices by 20 percent during the same period.

The platform plans to start on-boarding restaurants immediately, with a full rollout of services due to start in March in the UAE and Saudi Arabia later in the year.

Noon already operates a large e-commerce marketplace, and Alabbar said he plans to utilize the company’s existing fleet of vans to provide the food delivery service, helping increase efficiency and reduce costs.

Alabbar challenged rival delivery platforms in the region to drop their rates to 15 percent immediately. “Do it tonight. Drop it and let’s compete on 15 percent … let’s serve the restaurants beautifully.”

The Noon announcement comes hot on the heels of the launch of Kitch, another food delivery service opened in Saudi Arabia and the UAE by Dubai-based businessman Walid Hajj and Saudi entrepreneur Fahad Alhokair.

“Saudi Arabia and the UAE offer huge potential for this concept, and we are looking to be a part of an industry valued at more than $3 billion,” Hajj said in a press statement.

Kitch will open four delivery kitchens in Riyadh within the first quarter of 2021 and an additional 15 kitchens across the GCC throughout the year.

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