CASE STUDY: FOODDELFOOD DELIVERY PLATFORM IN GHANA Founded in 2020 in Ghana, to take advantage of the Covid-19 lockdown, Fooddel is an on-demand, online food delivery platform that links people looking for meals with restaurants seeking to provide them. The company uses independent motorcycle riders to deliver hot meals in a timely fashion, often minutes, depending on how far the restaurant is from the consumer and the traffic situation in a particular city. Fooddel started out in Accra but spread rapidly to other regions in the country. It currently operates in 5 cities (Accra, Cape Coast, Sekondi-Takoradi, Kumasi, and Tamale), works with an estimated 3,000 self-employed motorcycle riders, and an estimated 500 participating restaurants. Fooddel has become part of the food culture in Ghana since Covid-19 with riders delivering fufu, ampesi, joloff, pizza, fried rice, and soft drinks, mostly to the working class who order the meals online for delivery at home or in offices. Consumers in the country can use Fooddel to avoid the hassle of driving and waiting for food as well as crowded restaurants to maintain social and physical distancing. For restaurants, Fooddel has greatly expand their business without adding additional, expensive store fronts and instead maximized their footprint and investments. It also provides an opportunity for restaurateurs to advertise their offerings on the app and launch Examiner: Prof. John Effah/Dr. Owusu Acheampong Page 2 of 3 promotional deals. For riders, Foddel.com offers a flexible job that fits into their schedules. The net result is a win-win for all parties. What makes all this possible is the collection of technologies from databases to record in-coming orders, to a real-time dispatching system, to smartphones. Fooddel fast-tracks orders using a realtime dispatching and resource management algorithm based on machine learning software that analyzes orders based on the location of riders, customers, and restaurants, and then calculates the most efficient way of dispatching orders and selecting riders. This system can also analyze past patterns of delivery, and direct riders to areas of the city where they are most likely to be needed. This software enables riders to earn more in the same number of hours, and customers to receive their meals more rapidly, saving minutes on each delivery. Like nearly all gig-economy companies, including food delivery services, UberFoods and Joomla Foods, Foodell has not yet made a profit. Its losses also grew during this period, driven largely by ballooning administrative expenses, including technology. Fooddel and similar on-demand companies continue to operate thanks to estimated funds from venture capital investors, hoping the firm someday will be sold for a huge sum valuation or more. Fooddel is rapidly working its way through its investors money, and raising additional capital, by selling large chunks of the companys stock to investors. Fooddels business model is based on paying drivers below market wages and on the absence of benefits which are common in most countries and considered a part of paid employment. Fooddel accomplishes this in law by defining itself not as a food delivery service but rather as a digital platform used by self-employed independent contractors. Fooddel makes money by collecting a commission from restaurants for each order and charging customers a delivery fee. It pays its contract riders GHS 10 a delivery. The average rider makes from GHS 10 to GHS 20 an hour, depending on the number of deliveries. The average wage of paid couriers in Ghana is GHS 25 an hour with benefits, including healthcare, insurance, pension, and legal protections offered by the government, which pumps the overall compensation by 33 percent to about GHS 30 an hour. Food companies like Deliveroo and Foodora in Australia and the UK have been the subject of several lawsuits since 2018. In Ghana, delivery services are being accused of violating the Fair Wages Act and human rights advocates are ready to contest the legality of contracting arrangements. Lawyers describe Fooddels contracts as shams and say that the firms fail to pay reasonable wages as well as to deliver employee insurance cover, sick, leave, and pension payments. The intended lawsuits also claim Fooddel fails to provide for safety training for riders, and safety checks of motorbikes, resulting in numerous injuries to riders and pedestrians. The company claims it does not control workers, while the lawsuits and riders themselves claim Fooddel exercises near-complete control over riders by requiring uniforms, dispatching riders to restaurants and customers, tracking their performance, and disciplining those who do not meet its productivity requirements. Does Fooddel have a viable business model? In the past, it has had no trouble attracting riders to work for low wages. But it is finding it increasingly difficult to defend the legal status of riders as contractors. Since Covid-19, several workers have become un-employed. If the lawsuits continue, Fooddel may find its future growth in Ghana impaired by labor shortages and rising wages depending on the court decisions.

(Source: Adapted from Laudon and Laudon (2020), Management information systems: Managing the digital firm, Pearson)

CASE QUESTIONS

1. Discuss the advantages and disadvantages of Fooddel business, revenue and cost models and make appropriate recommendations to its management.

2. Discuss the social, legal, ethical, and technical challenges of Fooddels digital platform business in Ghana and how they can be addressed.