Careem announced on Tuesday that it will be charging zero percent commission on delivery from participating local restaurants, as more F&B outlets complain about the unsustainability of that model.
Instead, the Dubai-based ride sharing and delivery giant has replaced the percentage-based commission which food aggregators normally charge with a fixed monthly fee.
“The traditional commission model in food delivery has become unsustainable for restaurants, especially as deliveries have become a large percentage of their business,” said Mudassir Sheikha (pictured below), Careem CEO and co-founder.
“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,” he added.
Restaurants have become increasingly vocal about the negative impact that high commissions are having on their business as some apps in the industry now take up to 35 percent commission from each order.
Careem said it has designed its new model to support businesses of all sizes, especially the smaller local eateries.
“With our new model, Careem will accept what’s fair for our services so restaurants ultimately make more,” said Careem’s UAE GM Victor Kiriakos-Saad.
The new model has three main parts, the first of which is a fixed monthly fee. The fee for the processing of all digital payments and the actual cost of delivery minus what the customer has already paid is charged to the restaurant.
Careem said for small-value orders, restaurants will keep about 5 percent more of the value when compared to the commission model while for larger orders the difference increases with restaurants keeping over 17 percent more under the new model.
Depending on the size of the business and the volume of orders the merchant can choose from four bundles that suit their business needs, it added.
Careem launched its super app in July last year to herald a change in its business and drive future growth beyond its ride-hailing business.
Sheikha said at the time that the super app will help further delineate Uber and Careem, and their business offering.
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