"Delivery and intermediary commissions account for up to 30% of sales"
Seoul City survey: One quarter of delivery sales go to commissions
Political circles and industry discuss commission reduction and win-win measures
Yu Mo (50), who operates a jokbal delivery franchise in Seongbuk-gu, Seoul, has been sighing more often recently. Due to the nature of the store, over 90% of sales rely on delivery platforms, and the costs spent on commissions are increasing day by day, creating a heavy burden. Yu said, "The intermediary commission for the application (app) is 7.8%, but even after considering delivery fees, food ingredient costs, labor costs, and other expenses, the commission still accounts for a significant portion."
Yu Mo (50), who runs a jokbal delivery franchise in Seongbuk-gu, Seoul, has recently been sighing more often. Due to the nature of the store, over 90% of sales rely on delivery platforms, and the costs spent on commissions are increasing day by day, causing a heavy burden. Getty Images
According to the Seoul Metropolitan Government and others on July 1, commissions account for as much as one-quarter (24%) of the delivery platform sales at franchise stores. An analysis of the sales of 186 franchise stores from October 2023 to March 2024 showed that the proportion of commissions in delivery platform sales increased by 6.9 percentage points compared to October 2023. Among the components of the commission, delivery fees were the highest at 39.2%, followed by intermediary commissions at 30.8%, and advertising commissions at 19.7%.
Although there were moves to lower intermediary commissions last year through cooperative bodies involving delivery platforms, store owners still feel that the commissions are burdensome. Moon Mo (30), who has operated a pizza franchise for two years, also receives over 90% of orders through delivery platforms. Moon said, "Delivery and intermediary commissions account for 20-30% of sales, and about 10% is spent on advertising commissions," adding, "The commissions are extremely burdensome."
The higher the burden of delivery platform commissions in a particular industry, the lower the profit margin. According to the survey, among chicken, hamburger, and coffee businesses, the proportion of platform commissions in operating costs was highest in the chicken sector at 17.5%, while the operating profit margin was the lowest at 6.5%. In cases like Yu and Moon, where most sales depend on delivery, commission expenses are inevitably high. A city official explained, "Since this analysis excludes owner labor costs, the actual perceived profit may be even lower."
As the issue of delivery app commissions grows, political circles have begun related discussions. Store owners are demanding the introduction of a 'commission cap system' that would set an upper limit on total commissions, including delivery and payment fees. However, riders oppose the cap system, arguing that artificially lowering intermediary commissions would directly lead to a decrease in rider income. The Democratic Party's Euljiro Committee is currently negotiating with delivery platforms and franchise owner organizations to reduce commissions.
The Seoul Metropolitan Government plans to develop a 'Delivery Platform Win-Win Index' in the second half of this year. The city intends to create indicators that reflect objective figures and franchise owners' perceptions to encourage voluntary improvements by platforms.
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