"Ordering the Same Food Delivery Can Only Get More Expensive"
"In the End, the Burden Falls on the Customer"
"I want to go back to the time when there was no free delivery. It’s frustrating and regrettable."
Mr. A, who has been running a franchise chicken restaurant in Ulsan for nine years, said on the CBS Radio program 'Kim Hyun-jung's News Show' aired on the 8th, regarding free delivery, "There needs to be a new turning point, whether by improving or abolishing it," adding, "Even the owners who are already doing it cannot refuse, but they shed tears while doing it."
The commission fee system that business owners pay to delivery applications (apps) is divided into two types: flat-rate and percentage-based. The flat-rate system charges a commission of 88,000 KRW per flag and markets the store within a distance of 1.5 to 3 km. The number of flags can be increased to two or three, but whether they receive 100 or 1,000 orders per month, there is no additional commission fee. On the other hand, the percentage-based system does not charge a monthly fee but deducts about 6.8% commission from the amount paid by the consumer.
Mr. A said, "Most store owners prefer the flat-rate system." However, as delivery companies switched to free delivery services, a mood was formed where store owners were forced to switch from the flat-rate to the percentage-based system. As store owners followed the percentage-based system according to the free delivery service policy, the commission burden sharply increased. However, if they insist on the flat-rate system, they are not classified under the free delivery service, which risks a decrease in sales.
Mr. A said, "(After switching to the free delivery service system, among store owners) there are even talks about needing loans," adding, "You can’t run a business at a loss. Ultimately, they have no choice but to quit. Eventually, the price of chicken will have to go up." He continued, "This burden will be passed on to customers," and insisted, "There needs to be a new turning point, whether by improving or abolishing the system."
Attorney Lee Joo-han of the Minbyun (Lawyers for a Democratic Society) Civil Economy Committee said, "In principle, the cost of food delivery should be borne by the consumer," adding, "Baemin (Baedal Minjok) conducted free delivery promotions to strengthen its market dominance and increase its commission revenue. In this process, it restricted the franchise owners’ choice in setting delivery fees." He explained that imposing a transaction condition that forces a delivery fee of 3,200 KRW in Seoul could be considered an act of abuse of superior bargaining position causing disadvantage.
Attorney Lee warned, "With free delivery, store owners’ commissions increase, and since they don’t make a profit, they will eventually raise prices," adding, "At this rate, even the same food eaten in-store will inevitably become more expensive when ordered for delivery."
He also pointed out, "Although there have been many discussions over the past few years, solutions can also be considered through the yet-to-be-legislated Online Platform Monopoly Prohibition Act (Platform Competition Promotion Act)." Attorney Lee said, "To respond to unfair practices by dominant businesses in the delivery app market, market-dominant online platforms can be designated in advance," adding, "If that happens, unfair acts will be prohibited."
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