Local restaurant owners are struggling to make ends meet through the popular delivery app UberEats, with many calling on the service to lower its delivery fee. UberEats currently takes a 35 percent cut of the total price of every order made through its system, which can represent a significant portion for restaurants and cut into profits.
Karla Granville, operations manager at Little Bird Organics, described the fee as “frustrating,” saying that margins were tight enough as it is, but presence on UberEats is a valuable tool for marketing.
“What is most frustrating is that we don’t have the ability to adjust the pricing [for UberEats customers],” she said. “There is no room for us to make up the margin.”
Jeff Kim, owner of &Sushi, has followed suit and pulled almost half of his menu items from the UberEats menu to encourage customers to come in store, citing poor profit margins – &Sushi sells around $12,000 of sushi a week, and Kim estimates a third of that goes to UberEats. After UberEats takes its cut, Kim says it is “probably a loss.”
Kim said he has enquired with Uber about lowering the delivery fee, but was told it was non-negotiable. However, Al Brown-owned chain Best Ugly Bagels managed to negotiate a reduced fee when the service launched in March. While a spokesman for the company wouldn’t reveal the exact fee, he did say it was “a decent amount less” that the 35 percent.
A spokesperson for Uber said the fee varied between restaurants depending on the “volume and size of orders and marketing investment from restaurant partners,” but would not comment on whether Uber was making a profit from the fee, nor would he reveal what costs the fee is designed to cover.
UberEats currently operates in Auckland, Wellington and Christchurch, with over 500 partner restaurants. The Restaurant Association is currently discussing a lower rate for members with UberEats.