Baedal Minjok’s recently restructured fee system, which involves charging restaurant owners a fixed-rate commission of 5.8 percent, is now facing criticism from restaurants that say it imposes a higher cost burden, industry sources said Sunday.
The country’s No. 1 delivery app has expanded its fixed-rate system Open Service by lowering the rate from 6.8 percent to 5.8 percent per order starting Wednesday, while scaling back the other optional flat-sum system, Ultra Call. This charges restaurant owners 88,000 won ($72) per month to display one banner on the app.
Though the commission is lower under the new system, it has drawn complaints from many restaurant owners, who say they now have to pay more to get their banners displayed on the app.
Previously, owners who opted for the Ultra Call system could have their banners made highly visible to users.
But under the changed pricing system, Baedal Minjok rearranged the app so that the Open Service restaurants appear above the Ultra Call list. Restaurants using the new system are more visible, pushing the Ultra Call users further down the screen.
The company also limited the number of times a restaurant can register for Ultra Call to three, as restaurants were found to have registered for Ultra Call dozens of times to get their brands displayed more prominently than the others.
Opponents say the changed system practically forces restaurant owners to take the fixed-rate system, and that it represents an undue financial burden.
“Before, businesses would pay a flat-sum for the commission regardless of their revenue. With the new system, those with bigger revenues cannot avoid bigger burdens,” the Korea Federation of Micro Enterprise said in a statement.
“It goes further than just an increase in the commission, when the rent and personnel costs remain the same. It means the net profits for small businesses go down.”
Gyeonggi Province Gov. Lee Jae-myung also posted a statement on Facebook, criticizing the delivery app’s decision as “tyranny” stemming from a monopoly.
But Baemin said it had put a lot of thought into the restructuring, and that the app had been redesigned to provide fairer advertising opportunities for its users, so those who could afford more would pay more.
“Big businesses that spend more money to register Ultra Calls have practically been taking all the orders, and the damage went to smaller business owners,” Baemin said in a statement Sunday.
The company said about 52.8 percent of the 140,000 restaurants registered on its app would benefit from the lowered rate of Open Service.
Baemin also disputed the claims put forward by the Korea Federation of Micro Enterprise, denying that the new system would benefit only restaurants with monthly sales of below 1.55 million won from the delivery service -- mostly restaurants that depend more on earnings from their physical stores.
“Our calcuation shows that those with a monthly earning below 4.65 million won would benefit from the lowered commission fee,” Baemin said.
A German company, Delivery Hero, decided to acquire Baemin, which held a market share of about 55.7 percent in Korea last year. DH also runs Yogiyo and Baedal Tong, which have 33.5 percent and 10.8 percent market share, respectively.
By Jo He-rim (email@example.com