Deliveroo feasts on over half of some restaurants’ takings by charging commission on VAT
Deliveroo is gobbling up more than 50 per cent of the takings at some restaurants by charging commission on VAT, discounts and even refunded meals.
With thousands of independent outlets still dependent on takeaways or home orders, many have turned to the delivery giant in an effort to keep their operations afloat.
But the company has been hit by claims that it is imposing ‘extortionate’ fees on businesses. George Kontakos, owner of family-run Greek restaurant The Olive Grove in Cambridge, accused Deliveroo and other delivery firms of taking advantage of small venues during the Covid crisis.
With thousands of independent outlets still dependent on takeaways or home orders, many have turned to the delivery giant in an effort to keep their operations afloat. Picture: Stock
‘We’re in a fortunate position where we can carry on operating, but despite having good sales we’re not making any money because of Deliveroo and third-party delivery apps,’ he said.
‘We’ve had so many messages from people saying they thought that by buying on Deliveroo, they were helping their local restaurant. In fact, it is exactly the opposite.’
Under a deal agreed with the restaurant, Deliveroo charges commission of 33 per cent for orders below £25 and 30 per cent on anything higher, but a recent invoice shows The Olive Grove was billed on gross sales, including VAT and discounts, and the total fee equated to 54 per cent.
The restaurant was charged for sales of £6,104 even though special offers and refunds meant they actually took in only £5,091. After all deductions were made, Mr Kontakos was left with £2,835.
nder a deal agreed with the restaurant, Deliveroo charges commission of 33 per cent for orders below £25 and 30 per cent on anything higher. Picture: File image
‘Instead of charging us commission on the value of the order after the discount, which is what you would assume, they charge the commission on the amount before the discount, even though this amount has not been cashed,’ Mr Kontakos said.
‘They do this to inflate the commission they get. There is no way for you to make any money. We’re having to pay Deliveroo commission on the tax that we pay to the Government. It’s mind-blowing.
‘The solution is a commission cap of 20 per cent, which has been introduced in other cities like New York.’ A spokesman for Deliveroo, which insists all discounts offered are voluntary, said: ‘We have a positive track record of helping our small restaurant partners. This will continue to be our priority as restaurants look towards reopening.’