By day, a data scientist, and by night, an Uber Eats driver. Photo: Getty By day, a data scientist, and by night, an Uber Eats driver. Photo: Getty
Finance Small Business Restaurants slam food delivery apps for refusing to lower commission Updated:

Restaurants slam food delivery apps for refusing to lower commission

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Cafe and restaurant owners are urging food delivery companies such as UberEats and Deliveroo to help the hospitality industry survive the coronavirus lockdown by halving commission fees.

Most food delivery apps have responded to the unfolding crisis by waiving fees for customers who pick up their orders and paying restaurants on a daily, rather than weekly, basis.

Some have also eliminated sign-on fees and waived commission for 30 days for new restaurants that join the service.

But cafe and restaurant owners have said the measures do little to boost the cash flow of struggling businesses, as the apps are still charging a commission fee of up to 35 per cent on every order.

‘Empty pledges’

General manager of the not-for-profit Chapel Street Precinct Association Chrissie Maus said such large fees made it near impossible for food operators to cover their costs when using the service.

She told The New Daily the Melbourne food and drink hub of Chapel Street was in a crisis “it would find hard to come back from”.

“So given the constraints – and the absolute crisis and heartbreaking nature of the street at the moment – we really need the likes of UberEats to at least slash their fees by 50 per cent, if not more, because we’re haemorrhaging cash,” Ms Maus told The New Daily.

Among other things, UberEats has set aside $5 million of in-app marketing for small businesses, scrapped service fees on orders picked up by customers, and switched to a system of daily payments for restaurants.

But Ms Maus dismissed these measures as “empty pledges” that would not keep struggling restaurants in business.

Offering restaurants $5 million worth of in-app promotions would not help as outlets would be fighting for the same business, she said.

Eliminating service fees for customers who pick up their orders was unhelpful as most customers were staying at home and opting for home delivery, she added.

And waiving sign-on fees for new restaurants was another “red herring”.

“Because the real money to be made is not in the sign-on fees, but in the up to 35 per cent of commission UberEats strips from the restaurant’s bottom line on each order,” she said.

“Often this is larger than the profit the restaurant is making off each dish sold.”

Given the scale of the challenges facing the industry following the latest round of restrictions, and the surge in demand for online delivery services, Ms Maus said it was incumbent on companies such as UberEats and Deliveroo to immediately lower their commission.

“Right now, they just look like greedy giants,” she said.

Struggling to survive

Hello Sam Burger Bar owner Katherine Sampson said UberEats’ commission was so high that it wouldn’t be worth her restaurant “trading through [the lockdown] as we will start losing money by being open”.

Matt ‘Lanis’ Lanigan offered a similar prognosis.

The owner of Lucky Penny cafe on Chapel Street said the day after the Australian GP was cancelled in March, he lost $55,000 in function cancellations and saw daily trade fall 80 per cent.

Although he is in the midst of converting his business into a grocery store, Mr Lanigan had to lay off 13 workers after the Prime Minister ordered cafes, bars and restaurants to close their doors to the public.

He continues to sell takeaway food via the online delivery platforms, but said he probably wouldn’t for much longer as the profit margins were almost non-existent.

“If UberEats don’t understand that they should be supporting the industry in a time like this – not just here but in every big city in the world – then they’re just going to end up like the taxi drivers [they replaced] that didn’t understand that they should have delivered a better service,” Mr Lanigan told The New Daily.

“Thirty five per cent as a fee for building a platform is just outrageous.”

Responses from food delivery companies

Deliveroo told The New Daily it was keeping the same commission fees for the time being, but was helping partners transition into takeaway-only operations and would “move to daily payments to help ease cash-flow pressures for restaurant partners”.

It said it might consider further measures down the track.

UberEats also told The New Daily it was maintaining its commission fees.

It said it had introduced sustainable measures to help its partner restaurants “attract customers and increase order volumes” and that it would consider more measures “as the situation progresses”.

Among other things, MenuLog said it had committed $3 million in marketing efforts to promote local restaurants, halved commission fees on pick-up orders, and waived joining fees for new restaurants.

Doordash did not comment but said in a previous press release that it had waived commission fees on all pick-up orders placed through its platform, removed delivery fees for consumers “to generate higher sales”, and waived commission for 30 days for new restaurants joining the service.