Karachi restaurants suspend delivery through Foodpanda

KARACHI: Citing "unfair practices" as reasons, the All Pakistan Restaurant Association (APRA) has announced suspension of business with mobile food delivery marketplace Foodpanda in Karachi.

Earlier on Monday, APRA Chairman Muhammad Naeem Siddiqui had written a letter to the Foodpanda CEO, apprising the latter of members’ grievances and concerns, pointing out that Foodpanda "repeatedly pressed for an increase in commission and made some important demands".

The letter warned if unfair practices do not stop, APRA would consider stopping working with the company on a permanent basis, starting from 15 Sept.

“Vendor delivery is the original concept of Foodpanda and its own delivery was launched as an optional service. Forcing restaurants to close their vendor delivery - which will only increase unemployment but will also disconnect the food outlets with customers - is not acceptable at all. Vendor delivery should remain operational regardless of the size of the brand,” said the letter.

Speaking to Profit, a small restaurant owner registered on the application complained about how his restaurant has to suffer due to problems with delivery. Third-party delivery does not keep riders involved or connected to the business. Moreover, the owner complained of how smaller owners suffer greater than larger chains that can afford this cut in margins.

The APRA chairman said that a majority of members are being pressurized to increase commissions but it is impossible to pay 25-35pc commissions for aggregation services. It is especially difficult for new entrants, as their startup costs get drastically higher. “We need to ensure that there is a cap on commission that Foodpanda may charge,” said Siddiqui.

"Foodpanda managers blackmail APRA members to increase the commission from 18 percent to 25 percent; otherwise, their brands would be shut from the portal. This is the most unethical way of extorting pressure on any member to accept Foodpanda’s terms & conditions and it needs to be stopped immediately," Siddiqui said in the letter.

The APRA president said, “Our members have also complained that Foodpanda asks them to work with restaurants exclusively, which falls under anti-competitive business conduct and can be challenged in Competition Commission of Pakistan.”

Competition in the form of CareemEats, Eat Mubarak, EatOye and Cheetay exist.

He said that the restaurant industry is already hit hard by Covid-19 lockdown and now is the time when it needs maximum support from stakeholders. “We did raise similar concerns earlier but there has been no permanent solution from the high-ups, which has led us to announce suspension of services by all our members,” he said.

Siddiqui warned that all APRA members will be closing their tablets from 15th September onwards initially in Karachi and if no resolution is achieved, they will be left with no option but to close the Foodpanda services permanently nationwide.

Following the letter, various restaurants have taken to their social media and spread awareness about the boycott and how their valuable customers can order from them directly.