FoodTaxi, a food delivery service which has been operating out of Christchurch for the last 18 months, is set to close due to the dominance of UberEats in the city. UberEats launched in the Garden City two months ago, and it only took four weeks for the app to have a major impact on the local business.
FoodTaxi, a locally owned business, serviced restaurants such as Burger Wisconsin, Madam Kwong, Wholly Bagels and Little Saigon, cited costs as the reason for the closure.
“To pay staff a fair wage and all servicing costs we can’t charge less than $11.50 to customers but UberEats is charging $6.99,” said FoodTaxi owner Bas Van Wel. “We simply couldn’t keep going, we were only a team of eight drivers but sales almost dropped to nothing – down $47,000 over three weeks.”
UberEats itself has recently been criticised for taking a 35 percent fee from restaurants, which has led to some restaurants pulling items off the menu because they were not making money – a commission Van Wel said his company simply couldn’t compete with. “We were unable to match Uber’s price or up the commission from restaurants.”
A spokesperson from Uber defended the fee. “We have a delivery fee and a service fee to restaurants. It’s been structured that way because we are helping restaurants reach new customers and it’s a compelling proposition for customers,” he said.
According to a New York Times report in September, UberEats is the most profitable aspect of the overall Uber business, despite being a relatively late entry to the delivery market and facing stiff competition from existing delivery services like Grubhub and Postmates.