Uber Eats 'taking the shirt off' the hospitality industry's back - Restaurant Association

UBer Eats
There has been criticism of Uber Eats, which takes a 30 to 35 percent cut of each order. Photo credit: Getty

By Harry Lock for RNZ

With alert level 3 approaching, small, independent restaurants and cafés are coming up with new ways of making sure they can still deliver to hungry customers.

Initiatives range from a group of Wellington restaurants working together to deliver food across the city, to a New Zealand start-up with ambitions to compete nationwide with Uber Eats.

The efforts are all designed to make sure all the money goes towards the restaurants and sidesteps the fees which are incurred when using delivery companies.

There has been criticism of Uber Eats, which takes a 30 to 35 percent cut of each order, that it hasn't introduced stronger relief measures to help businesses deal with their current situation.

The typical profit margin for an order is between 3 and 5 percent.

"With our margins in mind, Uber Eats commissions are crippling for many hospitality businesses," said Restaurant Association chief executive Marisa Bidois. "During a BAU [business-as-usual] trading environment, our members have told us Uber Eats is generally only used as an add-on to their in-store sales.

"However, it is not BAU currently. With all shop fronts remaining closed and as the market leaders, Uber Eats is essentially taking the shirt off the industry's back."

Christchurch's Fush co-owner Anton Matthews agreed.

"It does amaze me that a lot of people don't understand quite how much Uber Eats clips the ticket," he said.

"They take 35 percent from us, and they also pass on pretty expensive delivery fees in my opinion to the customer.

"So we're asking our local community to jump on board. Order through us [but] expect it won't be perfect to begin with."

Businesses bandying together to help

The fact that restaurants are now allowed to re-open, but in a strictly contactless capacity - either through contactless pickups or deliveries - means food businesses are having to think outside the box.

Many of the smaller businesses aren't able to operate using a delivery service, such as Uber Eats, where their margins are just too tight.

In Wellington, businesses are turning towards each other for the solution.

Jackie Lee Morrison is the owner and operator of Wellington bakery Lashings. Just before the lockdown, she established the Pandemic Pack: a group of 15 small restaurants, cafés, and bakeries, who are all working together to provide their own delivery service.

When the country returns to alert level 3, that service will kick into action, taking orders through a website Morrison created herself.

"The way it's been set up is we have a central hub in the inner city, and we have three delivery windows, morning tea, lunch and dinner.

"You can order from all of us for one delivery, which is why it's logistically so complicated. In one order, you can have fried chicken, brownies, ice cream and bread, all from four different businesses."

When they go live - which is anticipated to be around Friday - they will be delivering as far as Porirua and Lower Hutt.

To supplement their income throughout the lockdown, Pandemic Pack released an online cookbook, with each business providing five easy to cook at home recipes each.

Currently, they've sold more than 5000 copies, with the standard payment of $10.

Ottilie Smith, the owner of zero-waste delivery service Yum Jar, said it has helped her keep on top of the kitchen costs.

"I've just been using what we have left over from the government subsidy.

"Now the funds that have come through from the cookbook, so that has been really, really great for all of us businesses to have that little extra support, because the government subsidy only of course covers your wages."

Also part of the pack is Soul Shack - which specialises in Nashville-style hot fried chicken; Sweet Release, which offers all-vegan sweets and treats; and Wooden Spoon, which makes hand-crafted ice cream.

Front of house staff from some of the businesses are being redeployed as delivery drivers - each one assigned to a different suburb.

The whole aim of the delivery network sourced by the businesses is to avoid using a multi-national company to deliver their food for them.

"All of us operate at such small margins anyway," she said.

"Say for example, I just did this on my own, I wouldn't have the resources but all working together as a community, we can share our resources and also then we can keep our profits, rather than paying these companies that don't really care about small businesses."

It's a show of solidarity, said Yum Jar's Smith.

"It shows the kind of environment that Wellington hospitality reall is: we're not all competing against each other, we all want each other to succeed in small business.

"It shows our resilience and passion for what we're doing."

A new platform to give the power to the restaurant

The Prime Minister yesterday urged New Zealanders to support their local businesses and keep an eye out for whether they deliver directly, not using a delivery company.

In a statement to RNZ, Uber Eats said: "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."

In Auckland, digital tech consultant Tim McLeod has used the lockdown to create his own platform, called Eat Local NZ.

He said he wants it to put the power in the hands of the businesses - 150 of which have signed up since last Friday.

"My favourite story is the food court on K-Road, where the landlord is getting her young son to help set up all of the vendors on the food court on the Eat Local platform," he said.

"They're going to get the guy who usually clears the plates, wipes the tables, to get on a scooter and start running deliveries locally."

He said they're looking to make partnerships with other start-ups to help with the delivery-side, if the businesses are unable to supply that themselves.

"The delivery part will be added, I think, in the two to three weeks-time is our current trajectory.

"They will just be added, from a venue's perspective, as just another delivery option. So they can still choose to use their own team if that makes the most sense to them, or they can choose to use a delivery partner."