A local rival to the Uber Eats app has been forced out of business after an Australian operator partnered with the business then backed out of plans.

Kiwi-built web app Eat Local NZ had been taking on the global giants, picking up and delivering takeouts to regional New Zealand during lockdown alert level 3, before it caught the eye of Australian counterpart Mr Yum.

READ MORE: • Local Focus: Eat Local app taking on Uber Eats for regional hospitality

Eat Local and the Melbourne-based operator partnered for Mr Yum's expansion into New Zealand, but just a few weeks later Mr Yum "locked the business out" of the platform and later offered AU$10,000 ($10,700) to buy it out.

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A note on Eat Local's website says it has suspended trading.

On its Facebook page, Eat Local founder Tim McLeod, said he was "devastated and sad to announce that today might be the end of Eat Local NZ".

Watch: The new Eat Local NZ, powered by Mr Yum. Video / Supplied

He went on to explain what had happened.

"Soon after launching on May 4 we were approached by Melbourne-based Mr Yum to partner with us. They believed in our values and our mission to help NZ small businesses, support Kiwis who've lost jobs, lift delivery drivers above minimum wage, and create a new Zealand. After unsuccessful attempts to unite NZ-based tech businesses we were excited to find a business so close to NZ that appeared to share our values," McLeod wrote on Facebook.

The Eat Local team had spent the past month building the platform with Mr Yum ready for a planned relaunch on June 8, he said.

"On Saturday (30/5) Mr Yum locked us out of their platform. On Sunday (31/5) they emailed saying they are going to enter NZ without us, and then offered to buy Eat Local for AUD$10,000," McLeod said.

"They say they feel they're misaligned with our business values. In my opinion, it seems pretty clear they can make more money without us and social programs like Local Legends; and we have become increasing vulnerable over the past four weeks."

McLeod said the "vulnerability was his fault": "I made the bold (some would say dumb) call to put everything we had into this partnership and rely on our good faith agreement.

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"We stopped any improvements to Shopify (there was a looooong list) and put everything we had into Mr Yum. We spent weeks building tech that would extend and improve their platform, we gave them all of our venue data to migrate, our team spent hundreds of hours setting up venues on the Mr Yum platform and so much more. We announced our partnership to our 800 venues and showcased all the exciting new benefits this partner offered - see the relaunch video and information links at the bottom of this post."

He went on and said the team at Eat Local were exhausted and had "had enough".

"There have been a lot of expectations built up about what Eat Local NZ was going to be for so many people. I have a lot of work to do to figure out how to do right by everyone and this may be too much to manage on top of trying to carve a new path for Eat Local NZ."

McLeod last month told NZ Herald Local Focus that he had pivoted away from his day job and my usual work during Covid-19 to create Eat Local and a solution that would be better for businesses and better for New Zealand than global giants.

He said the app was specifically designed for regional hospitality businesses that could not afford to use other platforms with large commission fees.

Eat Local NZ received praised from within the hospitality industry, and Nigel Latta.
Eat Local NZ received praised from within the hospitality industry, and Nigel Latta.

It took just a 5 per cent charge for commission and delivery, as opposed to the 20-30 per cent cut other operators charge.

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The platform had received praise from the hospitality industry, and Nigel Latta.

In the Facebook post, McLeod went on to he felt "like a total fool, I feel broken, I feel defeated, and just want to give up. But there's another part of me that still wants to fight for everything I believe in and why this whole thing started in the beginning. I don't know yet but as hard as this has been to write I owe you all the transparency of this message on where we have ended up."

McLeod has been contacted for further comment.

Kim Teo, co-founder of Mr Yum, refuted McLeod's claims - he said the company was excited to work with Local Eats NZ, but disappointed that it could not reach an agreement.

"We are as disappointed as anyone. We feel, however, that Eat Local NZ has misrepresented the facts," Teo said in a statement.

"We had a draft agreement, we were working together in good faith while finalising the agreement and, in the end, we couldn't agree on the terms of the partnership."

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Teo said it was Local Eats NZ had reached out to partner with Mr Yum.

"Over these weeks working together, we shared complete access to the Mr Yum platform and IP, helped the Eat Local NZ team to start onboarding venues, we had team meetings every morning, shared our learnings transparently and our future plans/vision for our product, and provided all of our assets and videos, which were adapted and used as Eat Local NZ content.

"When it became apparent over time that our visions for the platform and offering for venues weren't 100% aligned, we gave the Eat Local NZ team a couple of options to part ways respectfully; A) we could part ways and not contact any of the 800 venues in the list and Eat Local NZ could continue building their own platform or; B) that we could look at acquiring the list so that the venues had an immediate solution and can continue to offer pickup & delivery online."

He said the offer to explore acquiring the venue list included an ongoing revenue share for Eat Local.

Mr Yum had deleted the contact list of venues from Eat Local NZ after it had not received a response from the company, he said.

Restaurant Association chief executive Marisa Bidois said the situation surrounding the closure of Eat Local was very sad.

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"It was such a great initiative at a time when our industry needed it the most - we want to be there to support in any way we can," she said.

Eat Local has received an outpouring of support on social media, with the Facebook post receiving thousands of likes, comments and shares.