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The CEO of Karim Muddassir Sheikha, a Dubai-based company that provides food delivery services, said restaurants were at a disadvantage by increased delivery volumes during the pandemic.
High commission rates per order made it difficult for restaurants to survive, and restaurants were not on good terms with delivery collectors.
“We realize that the industry is not in a good position, and we are changing the whole business model,” he added, according to “CNBC” and seen by “Al Arabiya.net” .
Careem, which is owned by Uber, announced this week that it will charge restaurants a fixed monthly fee to be included in their app, rather than a percentage-based commission.
Sheikha said food delivery companies in the area charge up to 30% of the value of each order.
This squeezes the restaurant’s profit margins for deliveries, which represent “a large chunk of their business” due to the pandemic.
New economic model
Sheikha explained that in Careem’s flat fee model, the actual commission can be as low as 6% or 7%.
“If the value of demand increases, it decreases further,” he said. “This model will help restaurants retain more of their profits, improve their offerings and ultimately deliver a better customer service experience.”
He continued: “What we can lose in margins, we will make up for in volumes over time.”
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