Chef claims UberEats drove his $33K-a-week business 'broke'

On It Burgers was named Australia's best burger restaurant by Menulog. Photo / Supplied

The chef behind some of Australia's most popular burgers has flipped on UberEats, accusing the global ride-sharing giant of destroying his business and leaving him hundreds of thousands of dollars in debt.

Tony Plunkett says he was stabbed in the back by UberEats after helping spearhead its Sydney launch by setting up the country's first ever "dark kitchen" — a delivery-only restaurant — out the back of a shuttered Kings Cross nightclub.

Plunkett spent three decades running McDonald's stores before branching out to start his own business in Melbourne's Abbotsford in 2015, with On It Burgers — named Australia's favourite burger shop by Menulog — quickly becoming one of the most popular restaurants on the UberEats platform.

That led to talks with Uber, which encouraged him to set up the dark kitchen. Within 10 weeks of the July 2016 Sydney launch, On It Burgers was averaging 1200 deliveries and A$32,000 ($33,772) a week in sales — but the success was short-lived.

According to Plunkett, from the middle of October onwards his store would regularly "go invisible" in the app at peak dinner times, decimating his sales. At other times he would find his delivery radius inexplicably restricted.

"We became too popular," Plunkett said. "I was sucking too many drivers and riders into the store, so they shut us down. They would make us go invisible. If you go from 4km to 3km you lose about 60 per cent of your business."

He claims that prior to agreeing to set up the Sydney restaurant, he was given assurances that he would be granted a minimum radius of 4km, except in extreme weather. Crucially, however, he says there was no written contract.

"Everything was verbal — we were excited, we were running hard," he said. "I made investment decisions based on assurances from UberEats. That's where I'm at."

He says UberEats, which entered the Sydney market going up against an already well established rival in Deliveroo, was struggling to provide enough drivers to service its rapidly growing restaurant base — and he became collateral damage.

"I annualised over A$1.5 million in sales within 12 weeks, then to suit their purposes they shut me down," he said.

Text messages and emails from this period show Plunkett repeatedly pleading with Uber employees to fix the issues. "Have fixed it up," an employee said in a November 2016 text message. "Will contact the afternoon shift tomorrow to see what's going on."

Plunkett wrote back, "We peaked at sales of A$32,000 for two weeks in October, we are now down 25 per cent at A$24,000. We need to do a 50 per cent increase to get back on trend. Most of the sales lost were at dinner, where we make our money."

The employee assured him that she had "talked to the head of proactive" — apparently the driver-rider supply team that monitors the UberEats marketplace — "and double confirmed". "Sounds like we need to get the orders pumping again!" she added.

In another text exchange, an UberEats employee insisted the radius reduction was "just a glitch" that will "never happen again", adding "we're going to make this work, Tony".

Plunkett simply replied: "Going broke."

According to Plunkett, at times his restaurant would be invisible in the app while Dr Dough Donuts, which shared his premises, would be visible.

Dr Dough owner Geoff Bannister declined to weigh in on Plunkett's claim, saying only that he was careful to never make his business too reliant on delivery services like UberEats or Deliveroo.

"Today we're doing probably 15 per cent of what we were doing in that first six months on UberEats," Bannister said.

"Our biggest is our physical presence, we use (delivery) more as a marketing tool to get us out there. I'd probably be very cautious with any platform. Part of that is you're so reliant on their terms."

Unable to sustain the losses, On It Burgers Sydney ceased trading in October 2017 owing more than A$730,000 — A$202,000 to suppliers, A$95,000 for equipment finance, A$176,000 in superannuation and A$249,000 in PAYG instalments, news.com.au reports.

A second Melbourne store in St Kilda, which Plunkett claims he opened only after assurances the radius issues had been fixed, shut down in February this year. He no longer runs the original Abbotsford store but still owns the brand and receives a "small percentage royalty".

Plunkett has sent a legal letter to Uber alleging multiple breaches of Australian Consumer Law and the Franchising Code of Conduct, suggesting damages claims for the "relevant contraventions exceed A$7.08 million".

"It's not a small sum, it's well in excess of A$1m," he said, adding he needed the money to pay the hundreds of thousands of dollars he still owes to his creditors, "from the tax office to butchers and bakers".

"I just want to pay my creditors and move on," he said.

"(Uber) is using their financial muscle to block me in the courts. My lawyer said it will be hundreds of thousands of dollars to fight them. I don't have the wherewithal to take them on. The only thing left to me is to go public with it."

In a statement, a spokeswoman said UberEats "is aware of the claims being made by Plunkett and will strongly defend those claims".

"We place a lot of value on establishing long-term relationships with our restaurant partners and we want the marketplace experience to be positive for all players on the UberEats app," she said.