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Uber Eats eating into their businesses, say restaurateurs
Growing malpractices by online food ordering and delivery platforms in Sri Lanka have led restaurateurs using these apps to demand urgent regulation.
Delivery platforms like Uber and PickMe played a big role during lockdown. Pic by Priyantha Wickramaarachchi
They fear that companies behind these apps could be mishandling sensitive market data and promoting monopolistic business practices. Multiple restaurant owners alleged misuse of business information by Uber Eats, a charge the company rejected. “In a regulated world, this would be insider trading,” one pointed out.
Another said that data, particularly related to the most popular and frequently ordered foods on his menu, were being shared with other restaurants and brands that had “closer association” with employees at Uber Eats Sri Lanka.
At least six food entrepreneurs interviewed by the Sunday Times corroborated this–that Uber Eats agents had approached them with information about other restaurants that could be beneficial to their own business. None of them wished to be named for fear of being blocked from the popular app.
Uber Eats has access to all restaurant data on their platform including menus, number of deliveries, order size, delivery zone and so on. This information holds monetary value in the current business environment and can be used to grant unfair business advantage.
Several restaurateurs said they directly challenged Uber Eats on its practices. “We built our brand from the ground up with passion and hard work,” said one. “We did not wake up with data and enter the market to take over someone else’s share.”
Despite widespread claims to the contrary, Uber Eats Sri Lanka Lead Bhavna Dadlani said they were not true. “Uber Eats respects all restaurant partners on its platform,” she said, in a written response to questions. “We also value the privacy of our restaurant partners and don’t share competitor information.”
Sri Lanka still has no data protection law. A final draft of the Personal Data Protection Legislation was approved by Cabinet before Parliament was dissolved, said Jayantha Fernando the Chair and Convener of the Data Protection Drafting Committee. The law largely governs personal data rights of identifiable individuals.
But while the alleged misuse of data by Uber Eats may not violate the proposed legislation, the practice could be against the existing Intellectual Property Act of Sri Lanka, said Sanduni Wickramasinghe, Drafting Committee Member.
Uber Eats Sri Lanka reiterated that it has “always followed the highest professional standards and does not share partner-related confidential information.”
It said certain data is made accessible to all vendors with valid contracts on the platform via the password-protected Restaurant Manager Portal. This includes vendor metrics which is sales and transaction data relating to a particular vendor to help him or her better their own business.
But with no independent regulator for this sector–a part of the “gig economy”–it is still a case of the restaurateurs’ word against Uber Eats.
App users are also concerned about “towering” commissions charged by Uber Eats. One Colombo-based restaurant owner said his now stood at 24 percent of revenue. He insisted that it wasn’t “reasonable”. Vendors found it particularly difficult to meet this condition post-pandemic. Not only did ingredients cost higher, there were more import controls and lower sales amidst high overheads.
For him, the commission started at 10 percent, a well-known fast-food chain owner said. This was when he signed up with Uber Eats in 2018. But the platform tried to raise it within three months. “It’s like we come to work for Uber Eats and go home,” he complained.
There is also a glaring lack of transparency about how these commissions are charged. Some are already in the 30 percent commission bracket in exchange for, industry sources said, better placement on the app (search engine optimization). This gives them a competitive edge over those in the lower commission bracket as they are more likely to pop up on top when a customer searches for a food item.
Some restaurateurs said they didn’t want to switch to the alternative delivery platform, PickMe Food, because it wasn’t efficient. It lacked experience and competence, not enough drivers and the technology wasn’t up to standard, they said.
“There has been no visible rise in sales since our restaurant entered that platform,” one business, who was using both apps, said. PickMe Food had also tried to increase another restaurateur’s 10 percent commission to 20 percent but he had refused citing the platform’s multiple shortfalls.
He said, however, that PickMe food maintained good communication and that negotiation had not been unpleasant. On the contrary, members of the Uber Eats Sri Lanka team were “often unapproachable” where it concerned the negotiation of terms. It is intimidating to visit the Uber Eats office in Bauddhaloka Mawatha because it has “bouncers”, both vendors and drivers said.
Ms Dadlani insisted that Uber Eats has always been fair to all partners and that the business interests of all of them were important to it. “As we support businesses of all sizes, and given that each restaurant has its own unit economics, we negotiate commissions with each one based on a number of variables,” she said.
For certain businesses, a 30 percent commission was unsustainable, agreed Harpo Gooneratne, head of the Colombo Restaurant Collective. A solution could be a cap on the commission as some countries had, he said. Delivery platforms also had overheads and it was difficult to dictate terms.
A positive development, however, is that many local entrepreneurs are now developing their own apps (including Harpo’s). This way, there will be no monopoly anymore and that is the best thing that can happen,” Mr Gooneratne.
The advent of online delivery platforms has seen many customers moving away from dining in, said Shiva Balachandran, Director Operations at Café Sociale. “We spend a lot on our interiors and the ambience of our restaurants so that people can enjoy each other’s company in a great place,” he said. “So we were quite sad to see this happen.”
“Apps are killing the market,” he lamented. “They are killing entrepreneurial passion. I loved meeting people and talking to my customers. We still promote dining more than anything,” he added.” But the restaurant saw a 60 percent fall in revenue with the entrance of delivery apps.
At first, Mr Balachandran had decided that Café Sociale would not be on any delivery platform. But market conditions changed after the Easter attacks in April 2019. Delivery became essential.
Café Sociale signed up on Uber Eats and PickMe Food. And both wanted exclusivity from the restaurateur. He turned them down. Many vendors said they had received this request. “Some platforms even cross the line and tell us how to price our products,” Mr Balachadran complained.
His company pays a commission of 25 percent to both platforms, which he feels is a “huge margin”. Commissions get passed on to customers, affecting competitiveness. He temporarily withdrew from PickMe owing to inefficient systems and time lags a month into the contract. But he was encouraged by the support received during the pandemic to go back on. The systemic issues, however, still prevail.
PickMe is investing now on improving its app with input from vendors, said Jiffry Zulfer, CEO and co-founder of PickMe. The platform has been in the delivery business for 20 months and had admittedly pushed for higher commissions. But if restaurateurs were paying high fees to one company, it was only fair that others had the same privilege.
“We expect our vendors to pass on the benefit of lower commission to their customers,” he pointed out. As a result, food could be cheaper on the PickMe app than on the other. “Our competition then reproaches our vendors and dictates the prices they are allowed to post even on our platform,” he claimed. “This is completely unfair to us because we charged a lower commission.”
Uber Eats did not respond to a question related to exclusivity. Mr Zulfer maintained that, “The competition has been pushing for exclusivity”.
Mr Balachandran, too, said Uber Eats’ attitude could improve. Certain of its agents were “bullying” when it came to communication. “They have a ‘don’t-care’ attitude about our grievances, perhaps because they have hundreds of restaurants on the app now,” he reflected.
Drivers working for Uber Eats have their own grievances. Trying to talk to the office was a nasty affair, they said, requesting anonymity for fear of losing their jobs. One father-of-five said a billing error cost him a penalty of Rs 3000 around eight months ago. It is yet to be corrected.
Fuel and mobile charges were from their own pockets and so some deliveries cost them more than they earned. Fellow riders who protested against Uber Eats recently were struck from the app. Each driver had a weekly target of 225 (up from 170 seven months ago) orders. Meeting this was a challenge as the market was now saturated.
“There are instances where I need about five more orders to achieve my weekly target,” a driver said. “But I wouldn’t get a single delivery on the app and time runs out.”
“I left a good job at a well-known company because at first they promised us so many things,” another related. “The pay was good, the bonuses were good. But now there’s nowhere else I can go and I can’t feed my children right.”
Uber Eats responded that there was “a lot of incorrect information being spread with regards to targets”. Targets were dynamic and based on a driver’s level of engagement on the platform. Meanwhile, payouts are now on a per-km calculation and this gives greater benefit to deliverers.
“Delivery partners continue to have a real opportunity to achieve higher earnings than what was communicated to them at the time of registration,” Ms Dadlani said, adding that Uber Eats provided a dedicated hotline. Drivers said, however, that getting through was almost always impossible.
Nobody wants to see delivery platforms eliminated from the restaurant industry. What is needed now, however, is fairness. And if the sector isn’t sufficiently mature to regulate itself, the Government may have to step in.