Drivers nervous as Uber Eats enables businesses to deliver themselves

Friday, 8 May 2020

Prime Minister Jacinda Ardern has made a habit of praising Kiwi ingenuity in her press conferences.

Uber Eats will cap commission fees to 30 per cent and allow businesses to deliver through the app, but drivers are nervous this will mean fewer jobs for them.

After facing a backlash over its commission fees, which ranged from 30 to 35 per cent, Uber Eats had dropped fees to a flat 30 per cent permanently, the company said.

From May 18 restaurants will be able to use their staff to deliver orders made through the Uber Eats app, paying an 8 per cent commission rate. From August 1, this commission rate would increase to 16 per cent.

Uber Eats New Zealand general manager Jodie Auster said the changes to its fees were part of pre-Covid-19 plans to be more transparent.

* Uber Eats drivers are struggling in lockdown level 3

Uber Eats is dropping its commission cap by 5 per cent to 30 per cent after public backlash.

* Wellington hospitality businesses team up to launch Uber Eats alternative for post Covid-19 lockdown

Restaurant Association chief Marisa Bidois says Uber Eats' reducing its fees was a welcome move.

'Right now businesses are doing it tough, so giving them that choice and control is super important,' Auster said.

When the Restaurant Association asked for the Government to intervene on Uber Eats' high commission fees, Prime Minister Jacinda Ardern encouraged Kiwis to eat local and use restaurants that did their own deliveries under alert level 3.

Uber Eats NZ general manager Jodie Auster says part of the commission fee goes into supporting businesses.

Auster said the 'support local' message was 'well aligned' with its business.

'The app is exactly connecting people in their neighbourhood to restaurants in their neighbourhood.

'The backlash comes from people not understanding how the app works and where the marketplace fees goes to.'

Restaurant Association chief executive Marisa Bidois said 30 per cent was still high, but it was a 'step in the right direction'.

'Our small businesses have been bleeding. Anything that will help reduce costs is welcome. This shows they're listening,” Bidois said.

Auster said it would not be sustainable for the business to reduce its fees any further than 30 per cent as the fees supported drivers, its own operations and promotional funding for restaurant owners.

Driver Sanjesh Lallu says Uber Eats offering businesses to use staff to deliver their food would be a 'big loss' for drivers.

She said the commission fees went into Uber Eats' customer service and marketing for small businesses that typically relied on foot traffic to be noticed.

But Mexicali franchisee Richard Murray used the Uber Eats platform for his Christchurch business and said Uber Eats' $5 million promotional fund was not the support businesses were after.

Murray said the 30 per cent commission rate was a significant cost to a small business.

'It comes straight off the top line and you've got additional costs, so there's not much left at the end of the day.

'Ideally you'd have more people coming to your business, but it's going to be a while before we see that bounce back.'

Wellington-based driver Amanda High says public backlash against Uber Eats had affected her business.

In March Uber Eats introduced free pickups until July 31. From then on businesses would be charged 13 per cent commission.

Auster said in the first week of level 3, Uber Eats trips were the highest they had ever been in New Zealand, with 13,000 sign ups.

Uber Eats drivers told Stuff they were being impacted by the free pickup service on the app which was available under level 3.

Wellington driver Sanjesh Lallu said before the lockdown Uber Eats drivers typically earned about $20 an hour.

He said because customers were doing pickups from popular food chains on Uber Eats like McDonald's and Burger King, he made as little as $5 in an hour.

Lallu said the self-delivery option would be a 'big loss' for drivers.

'In level 3 people are still not using Uber X and on Uber Eats, I'm having to wait for four or five hours for one ride,' Lallu said.

Another Wellington-based driver, Amanda High, said Uber was two-thirds of her income and she had resorted to driving for Uber Eats as few people were using the ride share app during the lockdown.

'There have been no jobs. Our livelihoods have been deeply impacted,' High said.

'People boycotting Uber Eats has had a huge impact on business as it is, allowing self-delivery will make it even harder for us.'

She said level 2 also brought with it uncertainty about how popular Uber's ride share service would be when the alert level lifted, and she relied on Uber Eats to bring her some income.

'During this time Uber have not increased the commissions drivers' receive. It feels like they don't care about us, they're just out there to make a profit.'

High said she was considering driving for local delivery services.

An Uber spokesman said drivers had been busier than normal, and were being tipped nearly six times more than normal since reopening.

“We will continue to monitor how new features might impact them.”