Careem cuts commission for food delivery

February 5, 2021: It has been a significant disadvantage for the eateries as delivery volumes increased in the pandemic, the CEO of Careem said, a Dubai-based ride-hailing firm that provides food delivery services.

“It helped us survive the pandemic, but, as I mentioned, what happened was the restaurants got the short end of the stick,” said Mudassir Sheikha.

Uber, the owner of Careem, this week announced that it would be charging eateries a fixed monthly fee, which the app will list, instead of a percentage-based commission.

In the region, food delivery firms charge up to 30% of each order’s value, Sheikha said. That squeezes the restaurant’s profit margins for deliveries, which accounts for “a lot of their business” due to the pandemic.

Under Careem’s fixed-fee model, the effective commission can lower up to 6% or 7%, Sheikha said. “If the order value goes up, it comes down even more,” he said.

“This model will help the restaurants keep more of their earnings, improve their offerings, and eventually end up with better service experience for customers,” said Sheikha.

Also, Careem will benefit from having an effective and competitive food delivery service on its app, he said.

 “That gives people more reason to come to the Super App and hopefully, do other things on the Super App as well.”

This will be a win on the win, said Sheikha.