A Melbourne pizza business says it will stop using the UberEATS platform this week because the commission of up to 35% that the ride-sharing platform takes on delivery orders is not sustainable.
Meanwhile, the business says dealing with customer complaints about the UberEATS service also take up too much of its time.
Pizza Religion has five outlets across Melbourne and Geelong, and director Matt Hunter says his business is parting ways with UberEATS one year after its Hawthorn, Malvern and Armadale stores joined the platform.
“We’ve been with UberEATS for 12 months and we basically looked at it [initially] because with our current deliveries, we were so busy,” Hunter tells SmartCompany.
Initially the offer was that Uber would take a 22% flat rate on the value of Pizza Religion orders placed through the site, meaning that for a delivery order of $100, UberEATS would take $22, Hunter says.
“They’ve now raised it to 30% and recently asked for 35%,” he says.
Hunter says Pizza Religion processes a large volume of orders across all its stores, but the company will now evaluate new options for delivery services, deciding the deal on offer from UberEATS is not worth it for the business overall. The business has previously offered its own delivery service.
Along with the cut that Uber takes on orders, Hunter says his business also has to deal with complaints from their customers about UberEATS drivers and the delivery experience.
He says this is a time-consuming task, given Pizza Religion has no control over what happens to an order once it leaves the store.
“We get many calls form our customers complaining about the level of service from UberEATS and we can’t rectify it for them, which is very frustrating,” he says.
He believes others in the hospitality sector also have concerns about the standard of service through the food delivery platform.
“There is a lot of talk in the industry about the poor level of service and we simply want our product delivered in the best possible way,” Hunter says.
SmartCompany asked Uber to confirm how it determines what businesses are charged through its UberEATS platform, and what support is available for things like customer complaints.
The company declined to provide details of the rates that it offers partner restaurants. However, it said hospitality businesses are paying fees to Uber that go beyond a simple listing on its platform.
“Restaurant fees help contribute to delivery partner payments, 24/7 customer support, app development and marketing campaigns,” an Uber Australia spokesperson told SmartCompany.
There are no shortage of food delivery platforms in Australia and UberEATS says it has partnered with more than 5000 restaurants since launching in Australia in 2016, where it started with the Melbourne and Sydney markets before expanding into smaller markets like Canberra this year.
UberEATS says its strategy is to provide the most “rewarding experience” to restaurants when compared with its competitors.
SmartCompany asked some of those competitors what terms small businesses could expect when signing up to their platforms, however, a number of them indicated that small businesses are only informed of the exact terms of an agreement upon starting the sign-up process with their platform.
Menulog was the only company to confirm its standard commission rate, which is 12% plus a two percent processing fee, or 14% of the overall value of an order placed on the platform.
Foodora declined to reveal its standard commission rate, instead telling SmartCompany the rate “is established on a case by case basis depending on the venue type”.
Deliveroo confirmed it charges according to a “performance-based model” where a small percentage of each order flows back to the delivery platform, but declined to reveal how this rate is calculated.
Each platform also has its own tools for supporting hospitality businesses with things like complaints, but these vary between each company.
Does your business use UberEATS or another delivery platform? Do you have a story to share about the service? Email us at news@smartcompany.com.au.
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