Takeways return Friday – but near-ruin eateries are rebelling against 30% Uber Eats fees

Business Insider SA
Uber Eats, Chicken Licken
Photo: Bombi Mavundza
  • Restaurants, which have been bleeding money since mid-March, are counting every cent to protect their profit margins when some start food deliveries on Friday.
  • Some restaurants have cancelled their credit card machine and fixed-line rentals, and are carefully looking at the cost of delivery services.
  • Uber Eats, which is charging 30% in commission, is too pricey for some restaurants, who are looking for cheaper alternatives or planning to do their own deliveries.
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Restaurants, which are under severe financial pressure, are considering the cheapest possible delivery options as they prepare to start delivering meals from Friday.

From May 1st, under Lockdown Level 4, the sale of takeaways will be permitted for delivery only from fast food outlets and restaurants.  Restaurants can open for food delivery services only, between 09:00 to 20:00. 

Food outlets are desperate for income, after bleeding money since mid-March. In the run-up to the lockdown, they weren’t permitted to sell alcohol, or have more than 50 people on their premises. Spur reported that its turnover fell by 60% during this time. Then, all food outlets had to shut when the lockdown started on March 27th.

READ | How you can help restaurants, bars and other small businesses during the lockdown

Many restaurants – including big names like Spur and Ocean Baskets – are not reopening for deliveries on Friday, as they weigh up the expected income against the operating cost of running large kitchens.

But smaller restaurant chains, who may be desperate for income, are opening their doors to do deliveries.

They are, however, counting every cent, says Wendy Alberts, CEO of the Restaurant Association of South Africa (RASA). Some are doing away with landlines and credit card machines, which require monthly rentals, and opting for cheaper QR payment methods, like Snapscan.

They are also looking very carefully at the cost of deliveries, with Alberts saying the steep cost of Uber Eats, which asks outlets up to 30% commission on each meal ordered, as well as Mr D, which charged 22% in the past, are eating into profit margins. 

For the consumer, a 30% commission plus a delivery fee – which Uber Eats also charges – means that a R70 hamburger could end up costing more than R100, says Alberts.

RASA is also encouraging restaurants to search for cheaper alternatives, with Bolt – previously known as Taxify – offering some restaurants a 14% fee during lockdown.

When asked whether it would also cut its rate during lockdown, Uber Eats only told Business Insider SA that it will "continue to consider all options". It is, however, not keen on deferring commissions - meaning restaurants would only need to repay fees after lockdown. 

"Shifting debt could create a financial burden for restaurants after this crisis passes, in a period where demand may be lower than average, and we don’t believe putting restaurants in arrears is the right thing to do."

Mr D Food said it is awaiting finer details of level four regulations from the South African government before making an announcement. 

Many restaurants are now considering investing in their own delivery services, particularly using scooters, says Alberts.

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