As many businesses grind to a halt to stop the spread of COVID-19, others are surging. Food delivery services like Uber Eats are experiencing unprecedented demand as consumers stay home and food outlets are forced into offering takeaway and delivery only.
In recent weeks, food delivery platforms took steps to smooth the transition to dine-out only for businesses but are yet to reduce their delivery service commissions which would effectively pass on a greater amount of the total order to the restaurant. Now parts of the industry are calling for them to do just that, arguing the very businesses the platforms service will go under without more help from the global giants.
Over the weekend, the Franchise Council of Australia, the peak industry group representing franchisors, franchisees and suppliers, called on delivery services to halve the fees they charge food businesses to deliver orders.
The group singled out Uber Eats, which it says has an 80 per cent market share and is charging businesses as much as 28 per cent of the total cost customers pay for their food.
“Of all the delivery networks, UberEats in particular will be experiencing a huge lift in volumes,” said FCA CEO Mary Aldred.
“Outside of delivery driver payments their costs remain fixed in most cases, and yet they are refusing to provide any flexibility in pricing.”
FCA argues the platforms must “share in some of the sacrifices” being made by the food retail and hospitality groups to help sustain an industry in turmoil that vulnerable people rely on every day.
“If food delivery platforms don’t share in some of the pain right now to help their partners in food retail survive, there won’t be a food retail industry left to support them,” Aldred said.
Uber would not comment on the FCA request to reduce delivery commissions in response to COVID-19 and pointed to the measures it had already taken.
Two weeks ago, Uber Eats announced its “relief measures” in response to coronavirus, largely aimed at getting more restaurants on its platform as they are forced out of the dine-in business due to social distancing rules aimed at stopping the spread of COVID-19.
The measures include $5 million in funding for independent restaurants to conduct Uber Eats promotions, waiving activation fees for restaurants new to Uber Eats, suspended fees for restaurants for pickup orders until June, allowing restaurants to receive their share of payments from Uber daily instead of the usual weekly, and Uber is allowing caterers to use the platform for the first time.
The company also pledged to deliver 25,000 meals to hospital workers and frontline services.
“We believe these measures are the right thing to do,” wrote Uber Eats APAC GM, Jodie Auster, “but we will continue to monitor the situation to ensure we are doing our best to provide certainty, stability and support to the entire community in this time of need.”
The steps were welcomed by the Restaurant and Catering Association at the time, which said they helped small businesses pivot to a new model, following in store restrictions. The group did not respond to requests for a follow up comment this week.
Other delivery platforms have taken similar support measures to Uber’s food delivery arm; reducing onboarding fees, offering marketing funds, reducing pickup fees, and promoting contactless delivery.
But like Uber, neither Deliveroo, Menulog, or DoorDash have budged on delivery commission fees so far.
“Commission fees will remain the same at this time,” a Deliveroo spokesperson told Which-50.
“However as the COVID-19 situation evolves, we are continuing to find more ways to support our restaurant partners. Deliveroo will this week move to daily payments to help ease cash flow pressures for restaurant partners.”
The spokesperson added the company is supporting restaurants new to its platform and had “refocused all marketing initiatives” to profile local restaurants.
DoorDash, which launched in Australia last year, is also not reducing delivery commissions at this time for businesses already using the platform but will waive them for 30 days for new restaurants.
The company is also onboarding new restaurants for free and has removed the fee restaurants usually pay for pick up orders via the DoorDash app. The company has also waived the delivery fees customers pay in the hope of encouraging higher sales for restaurants.
A DoorDash spokesperson said the company is also implementing new hygiene measures including contactless delivery by default.
Menulog, which has operated in Australia since 2006, is also waiving onboarding fees and says it is investing $3 million dollars in marketing for local restaurants. While other major platforms are waiving the fees they charge for pick up orders, Menulog is only reducing them by half.