Juri Loninia of Fried Chicken Headquarters, Henderson, says every order through Uber Eats is losing him money. Photo / Michael Craig
Juri Loninia of Fried Chicken Headquarters, Henderson, says every order through Uber Eats is losing him money. Photo / Michael Craig
A small Auckland eatery is sending out an urgent SOS to customers to stop ordering takeaways through Uber Eats, saying it could potentially shut the business down.
Fried Chicken Headquarters in Henderson sells fried chicken and burgers, and using the food delivery service has allowed its business to reach many new customers.
But as the number of orders increase through Uber Eats, the eatery’s co-owner Juri Loninia said every order “is losing us money”.
The eatery made $819.07 sales through Uber Eats over three days between July 26 and July 28, but after deduction of $225.31 in fees, $407.07 in ad spend, GST of $33.83 and a charge of $68 for “savings on items”, the business was paid just $84.11.
What the business got paid after three days of Uber Eats order.
The eatery has been sending out messages on social media asking customers to order direct from its store.
“Uber Eats fees kill us big time,” one message said after the business shared the above statement.
“Though we pay additional for advertisement to Uber Eats, the payout shows how much Uber Eats gets paid and how local businesses suffer just to use their platform to get more business visibility.”
Loninia said that one day in March, when they had $419.40 sales through the delivery service, what he got paid from Uber Eats was just $1.04 after deductions.
Fried Chicken Headquarters received just $1.04 from more than $400 worth of orders through Uber Eats.
“Uber Eats is killing us. Our business would be dead if more customers ordered through Uber Eats, that’s why we are sending out this SOS to customers,” he said.
Loninia said that when the business first opened in 2022, most of its customers were walk-in or ordered directly by calling the store.
However, since they signed up with Uber Eats about 18 months ago, the business has seen an increase in online orders.
Close to half its customers are now ordering through Uber Eats.
Juri Loninia is asking customers to stop ordering through the Uber Eats platform.
For every order, Uber Eats took a 30% cut and the store paid a further 15% in tax.
For a $20 order made through Uber Eats - without considering the cost of advertising - the store took away just about $11 from the order.
“Uber has hidden charges such as advertising costs and savings on items, so we end up getting so much less than the $11,” Loninia said.
“Basically, we are losing money sending out food through Uber Eats, and what we get back usually isn’t even enough to cover the cost of ingredients.”
Loninia said signing up with Uber Eats advertising had been a “double-edged sword” because while it allowed them to reach new audiences it was eating deep into its profits.
Uber Eats says the experience of Fried Chicken Headquarters is not reflective of other partner restaurants.
A spokesman for Uber Eats said the experience of Fried Chicken Headquarters was not reflective of the thousands of other businesses who have signed up to its platform.
“These results are in no way reflective of the experience we see from thousands of merchants on our platform in Aotearoa,” the spokesman said.
“Restaurant partners always make their own commercial decisions on how they price their items for online food delivery, when they use our technology, and the level of support they chose to receive from Uber Eats.”
The spokesman said restaurant partners could decide whether to leverage Uber’s advertising platform to help boost awareness of their brand, as well as the level of investment they allocate to advertising.
“Restaurant managers and owners who proactively opt into advertising have access to a self-service dashboard,” he said.
“This enables them to turn their advertising spend on or off at any time based on the results they are seeing.”
Marisa Bidois, CEO of the Restaurant Association.
Restaurant Association chief executive Marisa Bidois said delivery apps could present a valuable opportunity for hospitality businesses, allowing them to reach a wider audience and brand awareness.
However, she said businesses should consider the costs involved.
“Many of our members view the use of these platforms as part of their marketing strategy, recognizing there is some demand for home delivery and so offering this service can be an important addition to their offering,” Bidois said.
“However, it is crucial for businesses to factor the associated charges, such as commission rates, into their overall pricing strategies.”
Steve Armitage, Chief Executive of Hospitality NZ.
Bidois said that some of the association’s member restaurants had expressed concerns about the challenges posed by delivery apps including high commission rates, slow payments, price surges and driver errors.
“These factors often make it difficult for businesses to see profits from their delivery operations. Despite this, many still feel that this has become an important part of their business model,” she said.
“For some businesses with their own delivery drivers and online ordering systems, encouraging customers to order directly from the restaurant can be a good option, allowing them to avoid third-party commissions.”
