"Wolt to the aid of the restaurateurs - to reduce commission in the light of the announcement of the third lockdown" read the notice from the delivery company. The reduced commission will be 22% instead of 27%, and will be valid till the end of January. Wolt general manager Israel Lior Eshkol even said of the company's announcement that "Wolt was meant as a complementary platform for restaurants and not as a substitute for sitting in them," and continued, "Without the restaurants, Wolt could not exist." Wolt estimated the aid to restaurants in the millions of shekels.
So the restaurants will continue to set aside more than one fifth of the price of an order for the delivery company; this in addition to the delivery charge paid by customers via the company's app. It should be pointed out that the commission that Wolt publishes (22%) is an average; the actual commission is a matter of agreements with each restaurant. The average value of an order via Wolt is NIS 85.
Is a reduction in the commission to 22% genuine good news for the restaurateurs? "First of all, the effective commission is 25.5%, because you have to add VAT," says Shai Berman, CEO of the Restaurateurs Association. "Secondly, the reduction in the commission is welcome but inadequate, both because it is only valid for a month and because it is still an overhead that is very heavy for the restaurateurs. The commission to Wolt, including VAT, should not be more than 20%," Berman says. He also criticizes the percentage charging method. "The commission does not reflect the cost of delivery - if you make a NIS 100 order from a restaurant on the other side of town and the delivery person takes half an hour to reach you, I pay Wolt NIS 25, and if you make a NIS 400 order from a restaurant five minutes away, I pay NIS 100. That's a distortion. The problem is that many restaurateurs have no alternative."
Last week, "Globes" reported that restaurants were organizing to develop their own food delivery app with the aim of cutting commissions to half those charged by Wolt and the other main food delivery company, Ten Bis.
Under the conditions of the current lockdown, there will be no takeaway meals from restaurants. Many restaurants will have to revert to the "delivery to the park bench" model to people within the permitted radius of one kilometer. "This is another blow, especially to the small restaurants. Takeaway is very important to businesses that operate as food stands. It's not something that will save the industry, but it is something that makes it possible to preserve the infrastructure, especially the workforce, the equipment, and the reputation. If a restaurant was considered trendy six months ago and is now closed, it’s not certain that people will remember it when this is all over. This is a motivation to keep the business alive, even if it means losing money."
=Berman estimates that of 14,000 restaurants in Israel, 5,000 will not survive, and with the third lockdown, the numbers are rising.
Wolt stated in response, "In the past few months, there have been those who have attacked Wolt by spreading false figures on the amount of the commission that the company charges to restaurants. As we have said in the past, the amount of the commission is not uniform and is based on various criteria, the main one being the average size of an order from the restaurant. The reduction in the commission for the duration of the third lockdown as announced by Wolt will help all the restaurants that use the company, especially small restaurants with low average orders."
Restaurants recently applied to the Competition Authority with a demand that Wolt should be declared a monopoly in cities in which it controls more than 50% of the restaurant food delivery sector. The petition states that Wolt "exploits its dominant position to force on restaurants arrangements that restrict competition and harm the public." Among other things, it is claimed that Wolt will not allow restaurants to publish lower on-site prices, and that the 27% commission is a monopolistic price that will lead to higher prices and the inability of restaurants to generate profits, to the point that they will close down."
Wolt responded to this petition: "Wolt's goal is to provide the most efficient and fastest service everywhere in Israel, even in normal times and since the coronavirus pandemic started, Wolt has provided restaurants with a way of continuing to work and earn a living. Wolt sees itself as part of the restaurant industry and as the restaurateurs partner, as evidenced by the fact that more than 1,500 restaurants partner with us."
Published by Globes, Israel business news - en.globes.co.il - on December 27, 2020
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