'Frustrating' UberEats fee forces restaurants to downsize delivery menu

Tuesday, 24 October 2017

Al Brown's restaurant Best Ugly Bagels is one of few that successfully negotiated a cheaper rate for UberEats' delivery service.

Restaurant owners are calling on UberEats to lower its delivery fee as they struggle to make ends meet using the service.

The Restaurant Association chief executive Marisa Bidois said her organisation was discussing a lower rate for its members with UberEats because it was not always cost-effective.

Smartphone food delivery app UberEats takes 35 per cent of the total price of every order made through its app.

UberEats used &Sushi for its campaign images, but still pays the full delivery rate.

Owner of Auckland sushi restaurant &Sushi, Jeff Kim, recently pulled half of his menu items from the app to encourage customers to come in-store, so Uber could not clip the ticket.

* Aucklanders and restaurants embrace** UberEats

He said he was breaking even on meals delivered by Uber drivers from his two stores.

'It is not greatly profitable business.'

Kim said he sold an average of about $12,000 worth of sushi each week and about $4000 of that was going to UberEats.

'After we pay Uber 35 per cent, it is probably a loss.'

At the same time the number of customers dining at the restaurant had dropped.

He said he remained on the app because he hoped it would attract new customers.

Little Bird Organics operations manager Karla Granville said UberEats' fee was 'frustrating' because the margin between staff labour and profit at her two restaurants was 'already so small'.

'What is most frustrating is that we don't have the ability to adjust the pricing [on the Uber Eats menu]. There is no room for us to make up the margin.'

Like Kim, Granville said Little Bird Organics only sold dishes on UberEats that were cheaper and easier to make.

Granville said an UberEats fee of up to 15 per cent would be more sustainable.

Kim said he had asked Uber to lower its delivery fee but was told it was 'non-negotiable'.

However, UberEats negotiated a cheaper deal with chef Al Brown's restaurant chain Best Ugly Bagels before launching in New Zealand in March.

Al Brown & Co general manager Stuart Robertson said he could not say how much his restaurant paid UberEats to deliver its bagels, but said it was a 'decent amount less' than the standard 35 per cent rate.

Another popular Auckland restaurant chain, that did not want to be named, said it had also negotiated a lower rate with UberEats.

Kim said if UberEats was giving a cheaper deal to other restaurants he would feel betrayed, especially because the company used his sushi for its Auckland launch campaign images.

'They have been lying to me,' he said.

Uber spokesman Mike Scott said the UberEats fee for restaurants varied depending on the 'volume and size of orders and marketing investment from restaurant partners'.

He did not respond to a question about what costs the standard rate covered, or whether Uber was making a profit from the fee.

Co-owner of poultry restaurant chain Bird on a Wire, Sophie Gilmour said UberEats' rate was 'onerous', but it had lifted trade about 10 per cent in her restaurants.

'We do it for the marketing and brand awareness.'

More than 500 restaurants across Auckland, Wellington and Christchurch are signed onto the UberEats.

More than 80 per cent of The Restaurant Association's members who responded to a survey about UberEats said they were not signed up to the delivery service, mostly because it was too expensive or did not fit their business model.