Restaurants to rebel against 10bis commissions

10bis Photo: screenshot

10bis's NIS 500 billion acquisition by Dutch company Takeaway.com has revealed the large commissions earned by the Israeli B2B catering company.

A group of hundreds of restauranters has united in recent days and is planning a campaign against what it regards as depriving them of their hard-earned livelihood. Early this week, "Globes" reported a deal in which Dutch company Takeaway.com acquired Israeli company 10bis for over NIS 500 million. The report revealed that 10bis was charging a commission of almost NIS 4 for every deal conducted through it. These figures have aroused the anger of restauranters in Israel who pay these commissions, which amount to 6-10% on each meal.

The restauranters are planning to unite at a meeting scheduled in Tel Aviv on Sunday, August 6. The organizers are hoping that representatives of hundreds of restaurant businesses from all over Israel serving all types of food will attend.

The organizers say that the chains taking part in the struggle include Benedict, Landwer, Keton, M2R, and Japanika, as well as smaller cafes in Tel Aviv, such as the Streets and Tachtit café chains, and local businesses in northern and southern Israel. Some of these chains do not work with 10bis; they are joining and uniting to struggle against conditions in the sector that they say have become worse for businesses in recent years.

10bis said in response, "10bis markets thousands of restaurants to hundreds of thousands of customers all over Israel. We will continue offering added value to customers ordering deliveries online. We are getting excellent feedback from most of the restaurants and regret that a minority of the restaurants think otherwise. We are now busy establishing a delivery service that will make it easier for restaurants and offer rapid deliveries to our customers."

Tomer Mor, co-owner of Jeremiah and one of the organizers of the struggle, told "Globes" today, "10bis has become stronger in recent years and has become a kind of conglomerate. 10bis and Cibus have become a duopoly, with all of the employers giving food benefits to employees only through them, and this is the only option of using the benefit. They are exploiting this in order to charge the restauranters unrealistic commissions. They take 6% of the gross as a commission and they add 7.2% VAT on the tax invoice. They also take 10% of the order on takeaway.

"Businesses in office areas, such as Ramat Hahayal and Herzliya Pituah, have to work with them; otherwise, they lose the lunchtime traffic. They're taking over the market, and their takeover isn't due to the business owners; it's through the large companies." Mor adds that the consumers of these cards, most of whom are employees of high-tech companies, are completely unaware of the damage cause by their use. He comments, "The consumers today are smart and look for more transparent places with social responsibility. The people who use these cards, however, don't understand that and are unaware of the consequences for the businessowners. I have no idea how businesses that rely solely on 10bis survive, while businesses are collapsing."

10bis is not the restauranters' only worry in recent years, however. The Can and Bottle Deposit Law; the increase in the minimum wage, which increased salary expenses of restaurant businesses by 25%, the taxation on foreign workers - all of these have created enormous costs for them. "In recent years in the food and beverages sector, we have been relying on foreign workers we hired with state encouragement. Recently, as a result of the change in the law, tax assessments by the Israel Tax Authority of NIS 250,000 are being served. Businessowners weren't prepared for this, and it's causing them very significant damage. It's not money that's set aside and saved; it's money that doesn't exist. The profit in this sector is 8-10%. It's unrealistic and is causing businesses to close down. It's a major nationwide catastrophe."

While businesses are facing ever-rising costs, 10bis's commission have remained as high as they ever were. Mor says, "When the restaurant tax or the Can and Bottle Deposit Law came along, 10bis didn't say, 'Let's lower the commission by 1% or 2%, because you're being hurt.' They did nothing. They're blind to the businesses' distress."

The organizers of the meeting assert that these trends are threatening the sector with collapse. "There's terrible hypocrisy here. Tel Aviv owes its reputation to the restaurants, bars, and clubs. This culture is what is attracting young people to the city. These places are attracting domestic and foreign tourists. Because we're not strong enough in the sector, people are failing and we aren't managing to unite."

Meanwhile, entrepreneurs are sprouting up and trying to take advantage of the opportunity to replace 10bis and fill the vacuum created by the restauranters' frustration. For example, PaidIt is a new startup that is developing a digital restaurant platform for handling companies' restauranting budgets and payments in closed environments such as campuses and food markets. PaidIt recently raised $1 million and will soon offer its services to businesses.

PaidIt cofounder and VP business development Daniel Khayat told "Globes," "We see that the control of the market by two very large companies is harmful to everyone - first the restauranters, but also the customers. Our technological solution is to transfer everything to smart digital management instead of outdated cards. We can lower costs and give them back to restauranters now struggling under the burden. We're glad about every restaurant that joins our family."

Published by Globes [online], Israel business news - www.globes-online.com - on August 2, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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10bis Photo: screenshot
10bis Photo: screenshot
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