Restaurant owners in the US and around the world face a dilemma, do they sign the Uber Eats contract and reach thousands of possible new customers or do they forgo such a luxury in the face of the economical restrictions and barriers the contract places on them?
When a restaurant signs the contract, they agree to Uber 35% commission on every order made and delivered through Uber Eats.
What is essentially happening is that Uber Eats claims that they only provide a link between a freelance courier and a restaurant, the courier is not an employee of Uber Eats, and as such, they can claim a commission from the restaurant for providing them access to the courier that is delivering the restaurants food.
A quick look at one of the contracts clause and you will get the picture: "You acknowledge … Uber is a technology services provider … [which does not] provide any delivery or logistics services."
Uber Eats officially states that "Uber Eats is a marketplace that connects restaurants with delivery partners and eaters through our technology."
However, what has made some restaurants blink twice and sit up, are the counter claims that Uber Eats makes on its web site, and they include such statements as:
- "Download the Uber Eats app, find what you're craving, and we'll delivery (sic) directly to you."
- "… make your selection and watch in real time as we deliver your combo directly to your doorstep."
- "Uber Eats can help you beat the heat with hundreds of ice-creams and gelati options. You crave, we deliver."
- "… request a California Chicken Sandwich and watch as we deliver it to your curbside."
One Australian Lawyer Ben Robertson of Carroll & O'Dea Lawyers stated, "The real nature of the problem is [Uber's contract] shifts the responsibility and the risk of delivery and logistics onto the restaurant, but the restaurant really has no control over the routes the driver takes."
Another issue that has arisen from the contract versus reality is how the contract terms each party (side) of the contract: "Delivery Partners" (in other words, its drivers or riders) are "your agent". However, in reality the courier is a free-agent, neither employed by the restaurant or Uber.
This is held up by the contract that courier's sign up to when joining Uber Eats. When a new applicant signs the Uber Eats contract they agree to this: "I am not an employee, subcontractor or agent of Uber."
This basically implies that the courier is an individual or company that has access to the Uber Eats app and is sent requests for deliveries but is under no obligation to do so since the said courier has no legal standing with Uber other then the agreement that Uber pay's said individual for a service provided by Uber to a customer via a restaurant. Are you starting to see where this is going?
This implies that whenever there is an issue with a delivery, who do you blame? You cant blame Uber, because they don't "control" the driver, and you cant blame the restaurant, because they don't "control" the driver. A driver can get an unlimited number of requests and just deliver at will, some will arrive cold, others hot, and others, well, who cares?
Robertson goes on to explain that "So the restaurant could give a piping hot pizza to the Uber driver, but by the time it gets to the consumer, because of the route the driver takes, or the number of deliveries he takes along the way, it could be stone cold by the time it gets to the customer."
Who does the customer complain to? Will the customer order from the restaurant again, or will they use a different delivery service? If Uber has no control over the courier, how can constraints be put into place to make sure payment to the courier is made for a quality service delivered on time? If there are contractions, doesn't that mean that the courier is under control of Uber Eats?
As Jodie Auster, CEO Uber Eats Australia and New Zealand stated "When we're delivering at this scale, some orders don't get there in less than 30 minutes. Some orders don't get there in the way they had originally been intended."
According to the contract that Uber has with its restaurants, the restaurant is "responsible for the delivery of meals, maintain possession, control, and care of the meals at all times".
This is then followed up with a description of what makes a substandard meal, when a meal is delivered outside of a pre-set temperature or safe temperature range which means it must be warmer than 60 degrees Celsius for hot food and no more than 5 degrees Celsius for frozen food.
The issue of refunds is complicated, Uber controls this issue, and according to Robertson "Uber decides whether or not to refund the customer and can assign responsibility for the problem [to the restaurant, and the restaurant has no control over the process."
The problem of the contracts
Robertson claims that there is an extreme dissonance (imbalance) between the contracts (between Uber and the restaurant, Uber and the driver) and reality. Robertson shows this inequality within the clauses of the contract between Uber Eats and the Restaurant: "by using the Uber Services … you are bound by any future amendments and additions to this Agreement".
This allows Uber Eats to change the contract whenever they feel like it, and they did this once for refunds. In February 2018 Uber Eats changed the onus of refunds by including a percentage of the refund to be placed on the restaurants expense. Th refund comes into action when there are "missing items", "incorrect items" and "incorrect orders".
Auster states that Uber Eats has not done anything wrong in changing the contract or in having control over the contract, in regard to the issue of refunds, she stated that "We believe it is reasonable and fair for restaurants to contribute when they've forgotten to put an item in the bag. We also know that more than 70 per cent of our restaurants in a month have no missing or wrong food items."
The smart restaurantuer
Petty Cash Café owner, Caitlin Crauford is a clever businessperson, she does not fall prey to the wonders of Uber Eats, and read the contract (with her lawyer) and realized how one sided and unfair the contract is. Not only is 35% well below any profitability margin, in fact it would put her out of business or force her to raise her prices. She also realized that the contract is totally misguiding, and stated: "They are judge, jury and executioner, and I think that's really unfair. I just decided you're taking 35 per cent, and now you're going to pass some of these costs onto me like a feudal overlord would — I'm not using you anymore."
Another upset café owner, Josh Arthurs, owner of Burgers by Josh reached the same conclusions, but more for the un-economic viability of the contract, "By the time they take that 35 per cent, which is what most restaurants work on as a gross profit, you're not making any gross profit anyway. Basically you're doing it for free with Uber Eats."
Marketing Psychology
If working with Uber Eats is so bad, why do restaurant owners sign up with them?
Chrissy Symeonakis, CEO of Creative Little Soul, a marketing agency claims that its all about "missing out of the action syndrome", she states that "When delivery came along, they were given not really much of a choice. Restaurant owners are thinking: This is a new technology, but we don't understand new tech. But we need to get on board with [it], because now this is what the customer wants."
Uber Eats is not for everyone, as Auster stated "It isn't for everyone. And some restaurants do decide that they don't want to be in this online delivery game. But the market has spoken. The consumer has spoken. They love this product, and it continues to grow."
The end game
Arthurs claims that apart from losing on the deal with Uber Eats there are too many bad deliveries, and the so called missing items have nothing to do with the restaurant. He also claims that too many deliveries reached their customers too late, and the Google ratings of his restaurant were damaged by the additional Uber Eats delivery ratings. He was once a 4.3 star rated service, and ever since he joined Uber Eats it dropped a lot.
Essentially what Arthurs is saying is that Uber Eats confines you to an unprofitable contract where you don't control anything, you are liable for everything and you lose both money and reputation when using their services.
Arthurs claims "Before … we had about 4.2 or 4.3 stars, but since using Uber Eats, it's dropped a lot. The majority of the recent complaints are from unhappy Uber Eats customers who have ordered our product, which has been mishandled during transportation."
Here is one example of what Arthurs is claiming; A customer reviewed Arthurs delivery with this one-star rating "We got cold popcorn chicken that tasted like rubber, cold chips which nobody bothered to eat and our drinks were HOT." To which Uber apologized by posting this reply: "Very sorry for your experience. We are investigating what has happened, often uber EATS drivers will take on too many orders: and therefore, unfortunately deliver food cold."
According to Arthurs, an Uber representative explained that they (Uber) could not help Arthurs with his Google ratings, since they do not control what and where customers leave ratings. The Uber rep stated that "We give Eater's [sic] the ability to rate and leave comments related to the delivery of their order on the app. We hope they choose to leave this type of feedback here and not on Google. Unfortunately, we cannot stop Eaters from leaving comments elsewhere, and nor can we tell them to remove these comments. I know this is frustrating."
Uber and Fair Trade
Uber released this statement to the press last week: "Uber Eats relies on our restaurant partners to make our marketplace work. We know there is significant competition for restaurant partners and we will continue to work hard to deliver a great service to those restaurants which choose to use our app."
Bottom Line
Uber Eats is expanding fast, many small markets join up without realizing what they are joining. Most companies (small ones) don't bother reading the small print, and most don't realize what they are signing. The ones that bother to read the contract either don't sign it, or negotiate.
Large corporations, such as McDonald’s have a special contract with Uber Eats, size has power and power means you can negotiate. When you are a small café, you have limited or no power whatsoever, and Uber Eats can steamroll over you.
Small restaurants are worried that if they don't sign up their competition will out rank, out lead and push them aside. However, in reality, Uber Eats is destroying small businesses by taking a commission that is totally non-profitable, as well as taking no control or responsibility over the level and quality of the service they are providing. Or in Uber Eats words, a service to which they claim they are connecting the restaurant to.
There is a critical mass in every situation, and the critical mass in Uber Eats case will be when too many business boycott the service and join competitors that take over responsibility as well as lower the cost of the service.