Focus: Uber eats is coming to five new regional cities this year, and exploring delivering your groceries too. Video / Jed Bradley
After initially saying it has no plans to cut its rates, Uber Eats is now capping its commission at 30 per cent - from a former 35 per cent, or much lower if restaurants take a new option to use their own staff as delivery drivers.
Uber Eats has faced a triple threat during the Covid-19 crisis, with customers worried about sanitation, restaurants complaining about its fees, and new competitors offering cheaper rates.
From May 18 restaurants who use their own staff to deliver orders made through the Uber Eats app will pay a commission of just 8 per cent, pricing to 16 per cent from August 1.
And a click-and-collect option will have no commission until July 31, after which Uber Eats will take a 13 per cent clip of the ticket.
The new option might make Uber Eats drivers nervous about getting enough work, but Uber says restaurants can use their own staff for deliveries and still use Uber drivers as a fallback during busy times.
Cold burgers
In an April 26 guest editorial, former Uber Eats NZ boss Andy Bowie said a 30 to 35 per cent commission rate was necessary to make a food delivery service economic in NZ.
While some countries had lower rates, they also had higher population densities that allowed more multiple orders to be quickly delivered by one driver. Bowie said with NZ's population levels, batched orders would take much longer.
"No one likes their Big Mac 40 minutes late and cold after doing an extra lap around the city," Bowie said.
'Taking the shirt off the industry's back'
Uber Eats was forced to close during alert level 4.
It has resumed deliveries for level 3, but with a new wave of new competition from Uber's rideshare rivals, rental car companies who have rapidly repurposed, and even home-grown e-scooter company Flamingo, which has hired hundreds of drivers to deliver food on two wheels.
There were bitter industry complaints about Uber Eats' fees last month.
"With our margins in mind, Uber Eats commissions are crippling for many hospitality businesses," Restaurant Association chief executive Marisa Bidois told the Herald.
"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."
Uber Eats grows 52% during outbreak
The Nasdaq-listed Uber reported a US$2.9 billion first-quarter loss last week and announced plans to lay off 3700 fulltime employees or around 14 per cent of its staff.
But while the rideshare giant's core business was thumped during the quarter, investors shrugged off the paper-loss of a pending US$2b goodwill write-down, liked the fact that Uber offloaded its money-losing Jump e-bike and e-scooter business (bought by Lime); and appreciated that food delivery division Uber Eats grew 52 per cent during global lockdowns.
Uber shares, which troughed at US$14.82 mid-March, have since recovered to US$32.79 - slightly ahead of where they started the year.
