Karachi restaurants boycott foodpanda over exploitative practices, commission hike

Pandas are known for being cute and cuddly but it seems like one particular panda in town has a mean streak.

Recently, The All Pakistan Restaurant Association (APRA) temporarily suspended its services with foodpanda, over what they say are "unethical practices" by the mobile food delivery service that operates in multiple cities across the country.

The boycott, which includes nearly 200 eateries (and counting) and started September 15 onwards, was in response to demands made by the delivery service to increase online sales commission from 18 percent to 35 percent.

In a letter of complaint to the CEO of the company, Muhammad Naeem Siddiqui, chairman APRA apprised their member’s grievances and concerns, pointing out that foodpanda repeatedly pressed for an increase in commission and non-implementation of the agreement and made some important demands. It goes on to state that if unfair practices will not stop then APRA will stop working with foodpanda on a permanent basis.

The statement read, "We have received widespread complaints from our members, regarding your team’s coercive attitude and unfair business practices, which has raised serious concerns about your organisation."

It continued, "We have received widespread complaints from our members, regarding your team’s coercive attitude and unfair business practices, which has raised serious concerns about your organization."

According to APRA, the majority of their members were being pressurized to increase commissions while the industry already runs on razor-thin margins and it’s impossible to pay 25-35 percent commissions for aggregation services.

They say it is especially difficult for new entrants, as the startup costs get drastically higher and that there is a need to ensure that there is a cap on the commission that foodpanda may charge.

“Managers blackmail APRA members to increase the commission many folds, for e.g. from 18pc to be increased to 25pc, threatening and shutting their brands from your portal. This is the most unethical way of extorting any member to accept foodpanda terms & conditions and it needs to be stopped immediately”, Naeem demanded.

APRA members have also complained that foodpanda asks them to work with restaurants exclusively which fall under anti-competitive business conduct and can be challenged in Competition Commission of Pakistan.

He further said that the restaurant industry was majorly hit during Covid-19 and now is the time when they need maximum support from their stakeholders.

Apparently, the issues have been brewing for some time.

According to Farooq Mamsa, chief operating officer of upscale cafe Espresso, there had been issues between the restaurants and foodpanda before but those would be settled amicably. However, this time the latter took a much tougher stance and instead gave an ultimatum. It asked restaurants to end their own delivery services and use the app’s fleet instead.

“When we started out with foodpanda, it was simply them redirecting orders to us, which were then delivered by our fleet. Eventually, they built their own network and we adopted a hybrid model,” added Kaybees Director Danish Feroz Kalia.

Speaking directly to the association members, APRA spokesman Waqaz Azeem said, "We're not here to exploit anyone's rights and nor are we here to do something illegal. Instead, we're here to stop exploitative practices that we have experienced."

"I remember when they [foodpanda] had come to me initially, I would always liken them to the 'East India Company' because they also started off as freeloaders and eventually took over the Mughal kingdom. This is exactly how foodpanda also operates. We collaborated well in those early days and had a great relationship."

He continues, "They told us to get rid of riders, and we did. They told us to get rid of call agents, we did. And today we've cut off our hands and feet. And now they're asking us to cut off our necks as well...the bridge that they built to get to our customers, if now when they shut the door on our faces, should we just sit around and accept it? We don't have any way to get to our customers."

He says in order to save their own houses, the restaurant association needs to put an end to this exploitation.

APRA president warned that if no resolution is achieved in Karachi, they will close the service permanently nationwide.

As of September 21, the boycott now includes the Lahore Restaurant Association (LRA), Lahore Restaurants Unity Association (LRU), Islamabad Restaurant Association (IRA), among others.

Foodpanda did not immediately respond to requests for comment