Careem Cuts Food Delivery Commissions – Says Restaurants Got Short End of Stick
According to the latest reports, the CEO of Careem has finally talked about the delivery business during the pandemic. He stated that the eateries/restaurants found themselves at a disadvantage even when the delivery business increased during the COVID-19 pandemic. Careem is a ride-hailing company based in Dubai that also provides food delivery services in the country.
As per Careem CEO MudassirSheikha, Careem experiencing high volumes of deliveries during the pandemic. It saw its delivery service break all previous delivery records and the business flourished a lot. Unfortunately, the restaurants were unable to make much out of the delivery services during the pandemic. They got the least amount of profits and were only left with the short end of the stick.
He stated that it was due to the high commission rates for deliveries that made it really difficult for the restaurants to survive. It was also observed that the restaurants were not on very good terms with the aggregators of deliveries. The Careem CEO shared this information with the CNBC network at the Capital Connection show on February 4, 2021.
Sheikha admitted that the restaurant/eatery industry is not doing so well at the moment and needs all the support it can get. Therefore, Careem is going to do whatever is necessary and within its power to help the restaurant industry.
He stated that in order to facilitate the eatery industry, Careem has decided that it will be changing its business model completely.
The new business model has been designed to facilitate the restaurant/eatery industry as much as Careem can. Sheikha revealed that based on the new business model, the restaurants will now be charged a monthly fee to be listed on Careem’s delivery service. Most importantly, the monthly fee will be fixed so the restaurants will no longer have to worry about fees changing every moment.
The new business model designed by Careem has been made to get rid of commissions based on the percentages. Sheikha also stated that with the implementation of the new model, whatever they are going to lose in margins will be recovered due to the rise in delivery volumes.
It has been revealed that in Dubai, the majority of the food delivery firms charge up to 30% of the value of each order placed. As a result, the majority of the restaurants end up finding themselves very short on profits and margins. However, the restaurants need all the profits they can get per sale due to the pandemic.
He stated that during the pandemic, they have seen many restaurants go out of business while others are struggling to survive through the pandemic.
This is the reason Careem is doing whatever it can to make up for all the losses that the restaurants have incurred during the pandemic.