Karachi restaurants boycott Foodpanda over hike in commission

The All Pakistan Restaurant Association has announced boycotting Foodpanda in Karachi for three days due to a hike in commission. The boycott starting September 15 may affect food delivery services for some restaurants.

APRA chief Muhammad Naeem Siddiqui, in a letter of complaint to the CEO of the company, mentioned that Foodpanda repeatedly pressed for increase in its commission. APRA will permanently stop working with Foodpanda if grievances of its members are not addressed, Siddiqui said.

A majority of APRA members are being pressurized to increase commission despite the fact that the industry runs on low margins, according to the APRA chief. It’s impossible to pay 25-35% commission to Foodpanda.

He said it is especially difficult for the new entrants, as their startup costs get drastically higher. APRA needs to ensure that there is a cap on commission that Foodpanda may charge, Siddiqui said.

"[Foodpanda] managers blackmail APRA members to increase the commission manyfold, for instance from 18% to 25%, threatening and shutting their brands on the portal," he said. "This is the most unethical way of coercing a member into accepting Foodpanda's terms and conditions. It needs to be stopped immediately."

Foodpanda accused of killing competition

The APRA chief accused Foodpanda of killing its competition by forcefully stopping vendor delivery and restaurants from doing business with other delivery services.

“Vendor delivery was the original concept of Foodpanda and its own delivery was launched as an optional service," he said. "Forcing restaurants to close their vendor delivery has not only increased unemployment but disconnected them from customers and is not acceptable at all."

Siddiqui said APRA demands vendor delivery be operational for all restaurants regardless of the size of the brand. He alleged their members have also complained that Foodpanda asks them to exclusively work with restaurants which is tantamount to anti-competitive business conduct and can be challenged in the Competition Commission of Pakistan.

Asfandyar Khattak, an official of the CCP, told Samaa Money that the commission will look into the matter as it certainly reeks of anti-competition practices. 

Siddiqui said the restaurant industry was greatly hit by the Covid-19 pandemic 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 their high-ups," he said. "It has led us to announce suspension of services by all our members.”

All APRA members will initially be closing their tablets in Karachi from September 15, according to the APRA chief. If the issue is not resolved, they will be left with no option but to permanently close the services nationwide.

Samaa Money contacted Foodpanda CEO Nauman Mirza for their version. He said they were looking into the matter and will inform after assessing the issue. Their version will be incorporated in the story as soon as they respond to our queries.