Delivery App Fees Squeeze Korean Restaurants: Government Survey Reveals Unsustainable Commissions
Korean restaurants are increasingly reliant on food delivery platforms, facing a difficult choice: absorb high fees that erode profits or increase menu prices for consumers. A new government survey highlights this tension.
The survey, released Thursday, reveals that delivery apps generate over a third of small restaurants’ revenue, but charge fees significantly higher than what owners consider sustainable for their business models. The key takeaway is the unsustainable financial burden placed on these businesses.
A joint survey by the Ministry of SMEs and Startups and the Korea Commission for Corporate Partnership found that restaurants using Baedal Minjok, Coupang Eats, and Yogiyo saw an average of 36% of their monthly sales come through delivery apps in the first half of last year. This underscores how crucial delivery services have become for revenue generation.
However, the cost of utilizing these platforms is escalating. The survey indicated that the average commission fee charged by a restaurant’s top-performing delivery app was 8.2% per order. Restaurant owners reported that a sustainable commission rate would be closer to 4.5%, representing a significant 3.7 percentage point discrepancy between the actual and desired fee structures. This gap highlights the pressure on profit margins.
Adding to the financial strain are delivery costs. Restaurants paid an average of 3,333.3 won ($2.27) per order, compared to a “manageable” level of approximately 2,300 won cited by respondents. Costs were notably higher when utilizing riders directly contracted by the apps instead of local delivery companies, further impacting profitability.
Despite discussions about government-led mediation, the survey data showed no impact on restaurants. No respondent reported benefiting from the 2% commission rate announced in November 2024 as part of a “win-win” initiative for lower-revenue merchants. The survey didn’t clarify whether this was due to eligibility issues or a lack of implementation by the platforms, raising questions about the effectiveness of government efforts.
Lacking negotiating power, many restaurant owners feel trapped. When asked how they’d react to further increases in delivery costs, the most common response was to simply bear the burden. Over 40% stated they’d raise prices, either exclusively on delivery menus or across both delivery and dine-in options, passing the cost onto consumers.
While overall satisfaction with delivery apps remained relatively high at 63.2%, reflecting their importance in attracting customers, satisfaction with fee levels plummeted to 28.3%. This stark contrast underscores the growing dissatisfaction with the cost of doing business on these platforms.
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