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Deliveroo takes up to 35% commission plus VAT (a value added tax that looks like a goods and services tax) on certain orders, leaving restaurateurs relatively little to cover their expenses.
Mohsen Seify, owner of Crust Trust Pizza in Kingston, near central London, told CNBC that Deliveroo’s commission stands at 42% per order when VAT is taken into account.
“It’s too high,” he said, adding that in the past two months, the start-up over $ 2 billion had charged him between £ 4,000 ($ 4,973) and 5 £ 000 with £ 506 registration fee.
A Deliveroo spokesperson said, “We are here to deliver to restaurants that want to continue to offer their incredible food to families at home during this difficult time.” We are working with restaurants to optimize their delivery operations, and we are doing everything we can to make sure that people always have access to the food they need and need. “
Prime Minister Boris Johnson ordered restaurants to close on March 20 as part of an effort to slow the spread of the coronavirus. However, the restaurants were able to continue to offer take-out meals.
In an effort to increase their orders, restaurants across the country ran to sign up for Deliveroo, Uber Eats and Just Eat. The latter offers some of the fairest rates, according to restaurateurs.
U.K. Hospitality, an organization that represents restaurants across the UK, said the deliveries are helping to keep the nation safe at the moment.
“They also help alleviate pressure and queues in supermarkets as well as create jobs, while helping to generate income for restaurants,” said Kate Nicholls, CEO of U.K. Hospitality. “People will want to go back to the restaurant once it’s safe, so that’s one way to keep them afloat. “
A restaurant owner said he signed up for Deliveroo last week only because of the coronavirus. “Whatever they charge, we can’t say anything about it because it’s better than staying at home,” he said.
To help restaurants weather the crisis, Deliveroo and Uber Eats have temporarily cut integration fees and put in place teams to help new restaurants. They also introduced a same-day payment feature that allows restaurants to request payment any day of the week for the food they sell. Companies believe this should help alleviate cash flow problems.
Uber Eats has also waived the additional delivery costs charged to customers which can cost between £ 1 and £ 5.
But the measures are not enough for many restaurants.
Kadir Tuluk, owner of Surbiton’s Sunshine Café in London, said, “If Deliveroo takes 42%, how do you make money? He added, “They’re making money, not us. “
Tong Soklee, who owns the nearby Asian restaurant Yoriya, agreed that Deliveroo’s fees are problematic in the current climate. “Personally, I think it’s a bit high, but there is nothing we can do,” she said.
The commission rate is slightly better for restaurants with Uber Eats, but only marginally.
Uber Eats charges different levels of commission depending on the package chosen by the restaurant.
For the full package – where restaurants list on the app and use Uber Eats runners for delivery – there are variable commission fees that are capped at 30%. If restaurants use their own riders, it’s 13%, and if they only offer pickup, then it’s free. Deliveroo also has variable fees but the company has refused to disclose them.
“We are committed to supporting restaurants and the thousands who depend on them for their work and as an essential service in these difficult times,” said a spokesperson for Uber Eats.
“At the start of the crisis, we put in place a series of initiatives to help partner restaurants, especially small business owners, as they continue to cook their kitchens to feed people across the country. “
To try to minimize the risk of infection, Deliveroo and Uber Eats have introduced contactless delivery in their apps, but not everyone feels safe.
“We are currently the people most at risk,” said Kassem, owner of a fish shop. “We touch the table, they touch the same table. It’s impossible to be without contact. “
The Unite union has condemned the way restaurants are treated by food delivery companies.
“Most of our chefs, who risk going into the workplace kitchens to prepare meals for delivery, receive no supplement,” said Dave Turnbull, National Unit Officer responsible for hotel industry.
“We want to protect jobs when the lockout is lifted, so imposing additional charges on restaurants that currently have no public attendance is of no use. “
Uber Eats and Deliveroo have told runners they can request free masks and hand sanitizer, but some Deliveroo runners say they have waited weeks for security packages to arrive.
“I am a cyclist and have not yet received a Deliveroo hand mask or hand sanitizer,” said Roxana Cojocariu. Deliveroo did not immediately confirm whether Cojocariu was a pilot for the company.
British couriers told CNBC last week that they were earning far less than usual following the pandemic. The main reason is that many of the larger and more popular restaurants of the food delivery apps have chosen to shut down completely. McDonald’s, Burger King and KFC have all closed in the UK, as have thousands of other restaurants.
Amazon to the rescue
Falling orders don’t just hurt restaurants and riders: food delivery apps are also struggling.
Deliveroo admitted he was running out of money earlier this month as he sought to convince the UK competition regulator to approve an Amazon investment of $ 575 million.
He also reportedly dismissed 367 people this week and authorized just over 50 others.
A Deliveroo spokesperson said, “The extraordinary global health crisis we are experiencing has affected almost every business. As a result, like so many, Deliveroo had to consider how to overcome the challenges we all face, and make sure that we are in the strongest position possible after the crisis.
“This forces us to look at how we operate to reduce costs in the long term, which unfortunately means that some roles are at risk of redundancy and others will be on leave. It has been extremely difficult for everyone in the business, and our top priority is to make sure those affected are fully taken care of. “
Uber, meanwhile, plans to lay off 20 percent of its workforce. It is not known how many of them will come from the Uber Eats part of the business.
“As you can imagine, the company is studying all possible scenarios to ensure that we come to the other side of this crisis in a stronger position than ever,” said an Uber spokesperson.