The Restaurant Association is calling on the government to enforce a cap on commission rates for third party delivery apps.
Industry leader Uber Eats typically charges a 30-35% commission rate on all orders and with typical profit margins set at 3-5% many hospitality business owners resort to using Uber Eats as a loss-making marketing exercise.
“With our margins in mind, Uber Eats commissions are crippling for many hospitality businesses. During a BAU trading environment, our members have told us Uber Eats is generally only used as an add-on to their in-store sales,” noted Restaurant Association CEO Marisa Bidois.
“However, it is not BAU currently. With all shop fronts remaining closed and as the market leaders, Uber Eats is essentially taking the shirt off the industry’s back.”
Bidois explained that many restaurant owners would love to be in a position to not use Uber Eats but with their marketing power and the size of their customer database, they don’t feel they can take the risk.
The Mayor of San Francisco, where Uber originated, this week placed a 15% cap on commissions charged by all food delivery platforms in the Bay Area during COVID-19. The association is seeing increasing pressure across the Tasman on the same issue.
“We are urging the New Zealand government to place the same restrictions in the New Zealand market to give our Kiwi hospitality businesses a fighting chance of survival,” appealed Bidois.
“We’re also calling on Kiwis to support their local restaurants and cafes by jumping on their website or giving them a call with their delivery order.”
The association noted that over the past two weeks it had seen a lot of innovative solutions being created by other businesses for online ordering at a fraction of the commission rates.
“Our business owners are also doing their very best to pivot setting up online delivery systems where there previously were none and finding delivery drivers and vehicles,” explained Bidois.
“Many are desperate to get back into their businesses, serve their communities and start generating some revenues, however small. To do this, many are working for free in their own businesses so it’s a bitter pill to swallow to see Uber Eats take such a large piece of the pie.”
Before the country went into Level 4 Alert lockdown, Uber Eats New Zealand announced restaurant replied measures for Australia and New Zealand.
The package included $5 million in available funding for independent restaurants across Australia and New Zealand. The multi-million-dollar stimulus would allow restaurants to deploy promotions to attract customers.
Uber Eats also said it would introduce a new opt-in program for all restaurants on the platform offering daily payments, rather than the standard weekly payment. In addition to this, all restaurants would pay no service fees on pick up orders until 30 June.
It is yet to be confirmed if these promises made by Uber Eats New Zealand are still going ahead since the level 4 lockdown was activated.