Restaurant industry-platform, conflict intensifies over delivery fees
Baemin refutes “fees are similar to competitors”
Possibility of spread such as ‘Coupang Eats-Yogiyo’
There is also an analysis of “Sangsaeng Group putting pressure on each other because they cannot resolve their differences.”
The conflict between the restaurant industry and delivery platforms over the burden of delivery fees is intensifying. The restaurant industry has set its sights on increasing the fees of Baedal Minjok, which has the largest market share among delivery platforms. Woowa Brothers, the operator of Baedal Minjok, strongly protested, saying, “It is at a similar level to that of competitors.” As the delivery cost burden on restaurant companies is gradually increasing, there are concerns that the front may spread to other companies such as Coupang Eats and Yogiyo in the future.
The Korea Franchise Industry Association held a press conference on the 27th and announced that it would report Woowa Brothers’ unfair practices to the Fair Trade Commission that day. The core of the claim is that after encouraging franchise owners to use ‘Baemin Delivery’ (free delivery), the commission rate for using Baemin Delivery was suddenly raised from 6.8% to 9.8%. The Franchise Association said, “In January 2022, Baedal Minjok first changed the delivery app usage fee from a flat rate of 1,000 won per order to 6.8% of the order amount,” adding, “Last month, Baemin Delivery’s usage fee was increased from 6.8% of the order amount to 9.8%.” “We raised it by 3 percentage points,” he said.
The association emphasizes that Woowa Brothers, the company with the largest market share, has violated its obligations as a market dominant business operator. Franchise Association Chairman Jeong Hyeon-sik raised his voice, saying, “Experts view the price set by monopoly operators for delivery app usage fees, like credit card fees, as a price that self-employed people have no choice but to accept.” He also pointed out that giving consumer benefits to ‘Baemin 1’ of Woowa Brothers, a 100% subsidiary, rather than store delivery, where the restaurant company hires its own delivery people, is “driving the subsidiary’s work away.”
Woowa Brothers’ 9.8% commission rate is similar to other platforms. An official from Woowa Brothers countered, “Due to fierce competition with competitors in free delivery, tens of billions of won per month were spent on customer benefits. We raised Baemin Delivery brokerage fees to the same level as competitors, but reduced the delivery fee borne by business owners.” Woowa Brothers also claims that the store delivery commission rate has been frozen at 6.8%. Store delivery is known to account for 60-70% of Baedal Minjok’s total orders. Woowa Brothers emphasized that “the legal issues presented do not constitute an illegality” in response to the association’s claims.
The distribution industry believes that the Franchise Association’s ‘Report to the Fair Trade Commission’ card is an attempt to raise issues ahead of the National Assembly’s audit. In addition, there is an analysis that there is an aspect of putting pressure on the platform side as the delivery platform-store company win-win consultative body launched in July was unable to narrow differences of opinion on brokerage fees. The coexistence council is composed of 16 people, including four delivery platforms including Baedal Minjok, Coupang Eats, Yogiyo, and Taengkyoyo, four store representative organizations, four public interest members, and four special committee members from government ministries.
There is a possibility that the power struggle between restaurant companies and delivery platforms will spread further in the future. The Franchise Association explained that among the delivery platforms, only Baedal Minjok was reported to the Fair Trade Commission because “it is the undisputed No. 1 operator in the delivery app market and was judged to have engaged in a wide range of unfair practices, including price abuse.” He added that he is continuing to collect data on the unfair practices of Coupang Eats and Yogiyo, centered on the Association’s ‘Delivery App Incident Emergency Response Committee’, and hinted at additional steps to request administrative action.
Reporter Lee Min-ah [email protected]
Reporter Jong-ho Han [email protected]
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2024-09-29 00:36:40