Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Chinese food delivery apps face a backlash from restaurants – tired of the high commission they charge, some build their own digital platforms for takeaway orders

An open letter by a restaurant association revealed Meituan levies commission of up to 23 per cent, while Ele.me takes up to 20 per cent of each order. More restaurants in China are creating their own online platforms and using all-goods delivery companies to get takeaway orders to customers instead

For Mike Wong, the owner of a restaurant called Hong Kong Grassroots Canteen with two branches in Beijing, takeaway service has long been something of a headache.

In China, the delivery app Meituan Dianping and its rival Ele.me (owned by Alibaba Group, the parent company of the South China Morning Post) dominate meal delivery services. Users log on to the apps and order from the restaurants listed. Wong says Meituan charges a minimum of 20 per cent commission on each order – a significant amount for a small business.

“My profit margin is only 10 to 15 per cent. So for a takeaway order, all my profits have to be given to Meituan.

“In Beijing, many people order takeaways [even if it’s just] a cup of milk tea or a bowl of wonton noodles. The commission amount is across the board and doesn’t differentiate according to meal size or the distance covered by the delivery rider. The app takes the order and the money, and they keep the money for up to a month, which affects my cash flow. It’s a very unfair deal which is enforced upon us.”

Wong has started using FlashEx, an intracity delivery service provider which delivers all kinds of goods, to get his takeaway orders to his customers instead.

“In Australia [where Wong has also lived], clients pay extra for takeaways. In China, if you increase the cost of a takeaway meal, they will go away. So, I pay for the delivery charge using FlashEx, which charges by the distance covered by the driver. It costs around 10 yuan [US$1.41] for distances within 5km (3.1 miles). It’s much cheaper than Meituan.”

Wong is among a growing number of restaurant owners in China rebelling against what they call the “hegemony” of China’s dominant takeaway apps.

A recent report by data analytics platform the Data Centre of China Internet (DCCI) found that almost half of the country’s internet users used online delivery services last year, with 67 per cent being regular users of Meituan.

Criticism has grown more intense because of the Covid-19 pandemic, with restaurants being hit hard by business suspensions, staff exoduses and a tanking economy. In April, the Guangdong Restaurant Association published an open letter to Meituan, urging it to slash commission on deliveries and to drop what it calls unfair terms that require restaurants to sign exclusively with its platform.

In February, restaurant associations in the southwestern city of Chongqing, as well as in Hebei, Yunnan and Shandong provinces, all separately published open letters calling for commission reductions from Meituan and Ele.me. The letter from Shandong revealed that Meituan charges restaurant chains commission of 18 per cent and smaller businesses a 23 per cent commission, while Ele.me’s commission ranges from 15 per cent to 20 per cent of each order.

According to the letter, the commission Meituan charges is higher if restaurants want to work with other platforms.

A restaurateur who owns a sour and spicy noodle shop in Beijing, and who wishes to remain anonymous, has started putting a card inside each takeaway meal bag to increase direct orders. The noodle shop owner says the card includes the shop’s phone number, social media accounts and a 10 per cent discount offer.

“We get our own staff to deliver the meal. During the pandemic, when we were closed for [on-site dining] business, we took pictures of our dishes and set up an online order platform for takeaways. We didn’t have time to digitise in the past. We also put videos of how we cook the noodles onto video apps like Douyin to promote our shop. If we can build up a big enough customer base, we can stop using those [delivery] apps altogether.”

Liu Jingjing, founder of congee chain Porridge Jiahe, which has more than 100 outlets across China, told Chinese media it had upgraded its delivery app, which allows staff to interact directly with customers.

“This saves us the commission charged by delivery platforms, which can be used to benefit the customers. We have signed up more than two million members. We outsource the delivery service to [all-goods delivery firm] Dada,” Liu says.

A spokesman for Meituan said that. in 2019, more than three million merchants received takeaway orders through the app, with more than 80 per cent of restaurants paying commission from 10 to 20 per cent.

“The actual figure [charged] is much lower than rumoured … user experience, value for merchants and riders’ incomes have always come before the profitability of delivery platforms.

“After the launch of Meituan Waimai [which translates as “delivery”], we lost money for five consecutive years. Even in 2019, when we broke even, the average profit per delivery order was less than 0.2 yuan in the fourth quarter, accounting for two per cent of the revenue.

“We invest most of our income on helping merchants develop professional delivery services, acquiring orders and improving digital infrastructure.

“During the pandemic, for merchants affected by the pandemic, we gave back no less than three to five per cent of the commission. More than 600,000 merchants [benefited from this].

“For merchants in Wuhan, the commission was waived from February until the lockdown of the city was lifted … for Guangdong, so far, the amount of rebate we gave back to merchants, and other subsidies, amounts to more than 100 million yuan.” The lockdown of Wuhan, where the first coronavirus infections appeared in December, was lifted in April.

A spokesman for Ele.me said it has reduced or waived commission four times since the pandemic began, and supports restaurants by providing them with free advertising resources, such as on outdoor billboards, hotel TVs and other channels. Its other measures have been aimed at helping the sector ride out the pandemic.

“These include providing free lessons on self-survival for the sector, and the launch of a platform to help restaurant service staff switch to working as delivery riders [should they not find work following pandemic-triggered closures].”

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
×