UAE-based super app Careem, has introduced a commission-free model for its restaurant partners in a step to relieve the economic impact of the Covid-19 crisis on UAE- based local eateries according to the company.
The new model replaces the percentage-based commission that food aggregator apps conventionally charge with a monthly subscription fee, a model adopted by UAE-based Chatfood. According to the company’s release on Tuesday, the move comes at a time when restaurants are struggling with high commissions imposed by food aggregators and food delivery apps, which tend to charge commissions as high as 30-35 per cent per order.
Depending on the size of the business and the volume of orders, merchants can choose from four bundles that suit their business needs. The monthly subscription fee is fixed monthly and does not change with the increment of orders, giving restaurants more control and the ability to better plan their cashflow. Merchants signing up to Careem’s new model will have access to integrated payments, customer care and marketing.
For small-value orders, restaurants will keep about 5 per cent more of the value, while for larger orders the difference can be as much as 17 per cent higher by switching to Careem’s new model
“The traditional commission model in food delivery has become unsustainable for restaurants, especially as deliveries have become a large percentage of their business. At Careem, we have always been passionate about creating opportunities for Captains and small businesses. As such, we are launching a new business model that can help restaurants thrive in this new environment while being sustainable for us. We believe the new model gives restaurants of all sizes fair and transparent pricing to profitably grow while offering customers a more responsible choice,” said Mudassir Sheikha, co-founder and CEO of Careem CEO.
Commissions charged by aggregators became a particularly sore point during the pandemic, with many restaurants voicing their concerns and frustrations, paving the way for new companies to emerge.
UAE-based e-commerce giant Noon, also announced its own food delivery service, Noon Food, with commission fees capped at 15 per cent for its restaurant partners, offering free delivery to the restaurants, plus two per cent handling fees, for a total of 17 per cent in commission and fees.
Careem’s UAE GM Victor Kiriakos-Saad added more saying, “We share [Noon chairman] Mohamed Alabbar’s concern for restaurants in our region. We’re now offering restaurants zero per cent commissions. What Careem provides restaurants; discoverability, delivery, payment and care, doesn’t change whether an order is Dh50 or Dh500. With our new model, Careem will accept what’s fair for our services so restaurants ultimately make more.”
Careem suffered a brutal blow to its ride-hailing business during the initial lockdown in the region. In response, Careem launched its super app, offering multiple services ranging from online payments, ride-hailing services to food and grocery delivery.