COVID-19 alert level 3: Uber Eats says it has 'no plans' to cut delivery commission for struggling hospitality businesses

Food package left at door
A call has been made for the Government to apply a cap on commission paid to deliver food to customers. Photo credit: Getty.

Uber Eats has announced that it will restart food deliveries in New Zealand at 10am next Tuesday but says it has "no plans" to lower its commission rate for businesses.

The announcement comes as businesses reopening during COVID-19 level 3 are required to abide by strict hygiene and social distancing rules. Cafes and restaurants will remain closed, but hospitality businesses can provide takeaway orders using contactless delivery.

Describing the many challenges of COVID-19, the owners of a small, fast-paced Christchurch-based hospitality business told Newshub that with no income for four weeks, they're struggling to continue trading in what was a "very viable business" before the pandemic hit.

Having gratefully received the wage subsidy and negotiated a 50 percent rent reduction, Richard and Rachael Murray say they've jumped through many hurdles - but the biggest one will be how they operate under alert level 3. 

With dine-in services off the menu, the requirement for contact-free delivery of takeaway orders means that the many businesses will be forced to rely on delivery services like Uber Eats, for which in the current environment, the cost is too high.

"Uber Eats charges the hospitality provider around 30 to 35 percent of the cost of the order [depending on scale, some may pay less]," the owners said.  

"Given the slim margins that exist in hospitality, this level of delivery cost is unsustainable if it is to apply to most of the food prepared in a retail hospitality premise."

The owners said that under normal circumstances, Uber Eats is a useful "add-on" to in-store sales, but alert level 3 restrictions have changed the game completely. 

"As we approach winter, as dine-in isn't an option, most of our clients are likely to order from the comfort of home - self-collect even if allowed, will be in the minority," the owners said.

On April 11, the Business Insider reported that in San Francisco, the founding city of Uber Technologies, a temporary 15 percent cap was placed on third-party delivery platforms including Uber Eats, to help local businesses stay afloat during the pandemic.

"The irony is that if we and others don’t survive, Uber will not have a product to deliver, so it's in Uber’s own interest to work constructively and collectively with the hospitality sector to regrow our businesses," the owners added.

Restaurant Association chief executive Marisa Bidois confirmed that before the COVID-19 lockdown, a discussion with Uber had been held to discuss cost concerns and ask for help.

"I said if ever there was a time to show your support of the local industry in NZ, this is the time:  lower your commission."

A request for a commission cap on delivery drivers has been made to the Government, meanwhile, alternative options are coming forward.

"We have been contacted by so many amazing local community groups that are providing assistance with delivery at this time - there are a lot of other options out there," Bidois added.

In a statement on Tuesday, an UberEats spokesperson said there were "no plans" to change the commission rate for New Zealand businesses.

“We understand that this is an incredibly difficult time for the restaurant industry and particularly small business owners. 

"Our goal at this time is to support restaurants to stay open for business for as long as they can and to continue to capture the demand from customers through pick up and delivery," the spokesperson said.

The company said that a restaurant support package announced in April will focus on helping existing partners and new restaurants to quickly get onto the Uber Eats platform.

"Given the uncertainty and potentially lengthy nature of the current pandemic, our support package is focused on measures that are sustainable for us as a business, and also help restaurant partners to continue to attract customers and increase order volumes," the spokesperson added.

Newshub has approached MBIE for comment.