Food delivery apps ignore industry calls for commission cuts

[Photo by Lee Seung-hwan]

The South Korean food service industry is urging food delivery platforms to reduce commission fees as part of efforts to stabilize prices while major platforms such as Baedal Minjok, Yogiyo, and Coupang Eats are already in a price war.

During a meeting with the Ministry of Agriculture, Food and Rural Affairs, the Ministry of Oceans and Fisheries, and the Ministry of SMEs and Startups last week, representatives from the food service industry requested a cut in the commission fees charged by delivery apps.

According to industry sources on Monday, the three major delivery apps have not yet considered lowering their commission rates.

“There have always been demands to lower delivery commissions,” said a platform company official. “However, there have been no formal requests, and we cannot immediately reduce the fees based on discussions from a single meeting.”

Currently, Baedal Minjok has the lowest commission fee at 6.8 percent, followed by Coupang Eats at 9.8 percent, and Yogiyo at 12.5 percent.

These commission fees are charged to small business owners on each delivery order, leading to accusations that they are driving up food prices.

Market watchers believe that lowering the commission fees could further consolidate Baedal Minjok’s dominant market position, as it already commands 60-70 percent of all delivery orders.

About 70 percent of Baedal Minjok’s services are accounted for by its flat-rate Ultra Call subscription, which requires additional advertising fees by food business owners for increased exposure.

Unlike Baedal Minjok, Coupang Eats does not offer a flat-rate subscription. Even if the delivery apps collectively lower their commission fees, the impact might be limited due to the existence of such flat-rate services, industry watchers said.

In the midst of this competitive and complex environment, hy (formerly Korea Yakult) is set to enter the delivery app market next month. With a minimum commission fee of 5.8 percent, hy aims to disrupt the market.

This move follows hy’s acquisition of the delivery agency Mesh Korea (Vroong) last April, marking its first official business venture into the delivery app market.