Talabat temporarily refunds commission payments as restaurants struggle amid pandemic

The restaurants will have their commission payments refunded for the month of March, but will have to pay them back later

Abu Dhabi, United Arab Emirates, November 20, 2019.  
--FOR STOCK:  Talabat.
Victor Besa / The National
Section:  NA
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As restaurants across the UAE haemorrhage money due to the coronavirus pandemic, Talabat has announced it will temporarily refund commission payments for many of its restaurants for last month.

This initiative will be targeted at the small and medium-sized restaurants on the delivery platform, of which there are currently about 4,500, to improve their immediate cash flow.

Delivery aggregators, such as Talabat, charge restaurants a commission to be on their app and to use their drivers. Talabat does not publicly disclose its commission fee, but most aggregators charge on average between 20 and 30 per cent.

A study by JP Morgan Chase has shown that small to medium size restaurants on average have a very small cash buffer of about 16 days.

Of Talabat's small and medium sized restaurants, it is understood that the smallest outlets (those who are most affected by the pandemic) would be eligible to receive all of their commission payments for March back in one lump sum, while others will be able to get half.

However, this was a deferment rather than a refund, meaning the restaurants would then be given six months to pay the money back, across several instalments.

Talabat has dubbed the scheme its "community continuity plan", and said it would reassess extending the initiative to April, if the Covid-19 situation did not improve.

All renewal fees that Talabat charges to be on its platform have also been deferred for six months, and they have offered to onboard new clients for free.

Registration generally costs from Dh2,000 to Dh3,000 for new restaurants.

Muhammed Yildirim, managing director of Talabat UAE, says the company has been working with local authorities since February "to show our commitment to unwavering safety standards in the industry".

"A study by JP Morgan Chase has shown that small to medium size restaurants on average have a very small cash buffer of about 16 days," Yildrim said.

"We are in this together. Our futures are interlinked, and we want to show solidarity."

The situation would be re-evaluated at the end of April, Yildrim said, to consider the possibility of extending the plan.

He urged people to order from local restaurants to "ensure their survival".

In March, Talabat announced that it would waive delivery fees for restaurants close to where a person was ordering from.

In recent weeks, the spotlight has been placed on delivery services, and the commission cut they take.

While it is standard practice for third-party services to take a cut from restaurant orders to fund their business models, restaurateurs have taken to calling on such providers to revisit their percentages amid the current pandemic.