Uber Eats imposes ‘unfair contracts’ and ruins deliveries, restaurateurs allege

By business reporter David Chau

There’s no doubt that consumers enjoy the convenience of food delivery — it’s estimated Australians spend $2.6 billion on it each year.

Uber Eats is one of the major players in this market, and has been expanding quickly since ride-sharing company Uber introduced it to Australia in 2016.

What consumers may not know is that restaurant owners have to sign up to some dubious contract terms if they want Uber Eats to deliver meals for them.

One of these terms is: “You acknowledge … Uber is a technology services provider … [which does not] provide any delivery or logistics services.”

This is in addition to charging restaurants a 35 per cent commission for every delivery made.

Despite Uber denying it does “deliveries” in legal documents, several posts on its website tell a different story:

“Download the Uber Eats app, find what you’re craving, and we’ll delivery (sic) directly to you.”

“… make your selection, and watch in real time as we deliver your combo directly to your doorstep.”

“Uber Eats can help you beat the heat with hundreds of ice cream and gelati options. You crave, we deliver.”

“… request a California Chicken Sandwich and watch as we deliver it to your curbside.”

Uber imposes this “fiction” on restaurants to minimise its responsibility, according to Ben Robertson of Carroll & O’Dea Lawyers.

“The real nature of the problem is [Uber’s contract] shifts the responsibility and the risk of delivery and logistics onto the restaurant, but the restaurant really has no control over the routes the driver takes,” Mr Robertson said.

In a statement to the ABC, Uber maintained that: “Uber Eats is a marketplace that connects restaurants with delivery partners and eaters through our technology.”

Who’s working for who?

Another “fiction” is Uber’s requirement for restaurateurs to consent to a term that says “Delivery Partners” (in other words, its drivers or riders) are “your agent”.

Several restaurateurs have complained to the ABC that they actually have no control over Uber’s drivers — whose workload and wages are controlled by Uber through its app.

Uber goes to great lengths to distance itself from any perceived control over the drivers or riders.

To become an Uber driver or rider, applicants have to agree that: “I am not an employee, subcontractor or agent of Uber.”

The implications of who controls the drivers — whether it’s Uber or the restaurants — are serious.

Mr Robertson explained: “So the restaurant could give a piping hot pizza to the Uber driver.”

“But by the time it gets to the consumer, because of the route the driver takes, or the number of deliveries he takes along the way, it could be stone cold by the time it gets to the customer.”

The disgruntled customer would then want a refund, which leads to further complications in Uber’s contract with restaurateurs.

Given the huge scale of Uber Eats’ delivery operations, mistakes do occasionally happen, its general manager concedes.

“When we’re delivering at this scale, some orders don’t get there in less than 30 minutes,” said Jodie Auster, the head of Uber Eats (Australia and New Zealand).

“Some orders don’t get there in the way they had originally been intended.”

Who’s responsible for ruining ‘Fat Friday’?

One thing is apparent in Uber’s contract with Portier Pacific (its Australian subsidiary) and restaurant owners — many of which are small business owners — is that Uber seeks to minimise its liability as much as possible.

Its terms suggest the restaurateur has a lot more control over the entiredelivery process than they actually do.

For instance, restaurateurs are “responsible for the delivery of meals” and they “maintain possession, control, and care of the meals at all times”.

If the customers complain about the meal being substandard, then Uber has the power to “deduct refunds” from the restaurateur.

What then is a “Substandard Meal”, according to the contract?

It’s a meal that falls outside Uber’s “safe temperature range”. For hot food like pizzas and burgers, it must not fall below 60 degrees Celsius.

For cold food like ice-cream, it must not rise above 5 degrees Celsius.

But the complication is, if Uber’s riders or drivers take too long in delivering the customers’ food and it arrives late, Uber has the power to force restaurateurs to pay for the refund.Dark kitchens cooking the online menu’Dark kitchens’ are being built in Australia to produce food only for the delivery market.Read more

“Uber decides whether or not to refund the customer and can assign responsibility for the problem [to the restaurant],” Mr Robertson said.

“And the restaurant has no control over process.”

Late delivery was the most common complaint about Uber’s delivery drivers that restaurant owners and customers made to the ABC.

One disappointed customer was carpenter Carl Sierra, who has been ordering lunch via Uber Eats deliveries every week for the past 14 months, as part of a routine he calls “Fat Friday”.

“In recent weeks, we’ve had dishes that were ‘meant to come’ not come, drinks that [end up] warm, and [hot] food that [arrives] cold,” Mr Sierra said.

“When you’ve been slaving away on the building site, it’s a disappointing thing.”

‘Judge, jury and executioner’

“The problem with the relationship here is there’s a real inequality in the bargaining positions between Uber and the small business operators,” Mr Robertson said.

He said the clearest example was this clause: “by using the Uber Services … you are bound by any future amendments and additions to this Agreement”.

This term gives Uber the right to vary the contract — a power which the restaurant does not have.

Uber used its power under this clause to amend its refund policy in early February.

While Uber used to cover the cost of customer refunds, it now requires restaurant owners to pay a percentage of that refund in cases of “missing items”, “incorrect items” and “incorrect orders”.

Ms Auster defended Uber’s policy change.

“We believe it is reasonable and fair for restaurants to contribute when they’ve forgotten to put an item in the bag,” Ms Auster said.

“We also know that more than 70 per cent of our restaurants in a month have no missing or wrong food items.”

Caitlin Craufurd, who owns the Petty Cash cafe in Sydney, severed her ties with Uber because she did not believe there was much transparency in how the company would make its blame-apportionment decision.

“They are judge, jury and executioner, and I think that’s really unfair,” Ms Craufurd said.

“I just decided you’re taking 35 per cent, and now you’re going to pass some of these costs onto me like a feudal overlord would — I’m not using you anymore.”

‘It isn’t for everyone’

Josh Arthurs, the owner of Burgers by Josh, also made the same decision last week, partly for economic reasons.

“By the time they take that 35 per cent, which is what most restaurants work on as a gross profit, you’re not making any gross profit anyway,” Mr Arthurs told the ABC.

“Basically you’re doing it for free with Uber Eats.”

So why do small business restaurants sign the contract, knowing that Uber will take 35 per cent of their revenue?

Essentially, it’s a fear of missing out, according to Chrissy Symeonakis, head of Creative Little Soul, a marketing agency with a specialty in the food industry.

“When delivery came along, they were given not really much of a choice,” Ms Symeonakis said.

“Restaurant owners are thinking: This is a new technology, but we don’t understand new tech.

“But we need to get on board with [it], because now this is what the customer wants.”

And how can Uber justify its significant commissions, given the average restaurant profit margin is 2-4 per cent (according to the Restaurant & Catering Industry Association of Australia)?

“It isn’t for everyone,” Ms Auster said.

“And some restaurants do decide that they don’t want to be in this online delivery game.

“But the market has spoken. The consumer has spoken. They love this product, and it continues to grow.”

Botched deliveries and ruined reputations

Mr Arthurs said another reason why he cut ties with Uber was “one too many” botched deliveries.

He alleges Uber’s delivery drivers, on several occasions, delivered meals to his customers more than an hour late — with hot food turning up cold, and cold drinks ending up warm — and sometimes with food or drink items missing.

The flow-on effect was that disgruntled customers began posting scathing reviews about the Uber Eats delivery service on his restaurant’s Google page, which he felt unfairly affected his review score.

“Before … we had about 4.2 or 4.3 stars, but since using Uber Eats, it’s dropped a lot,” Mr Arthurs said.

” And the majority of the recent complaints are from unhappy Uber Eats customers who have ordered our product, which has been mishandled during transportation.”

One reviewer named Maddy Linke posted a one-star review about Josh’s restaurant stating: “We got cold popcorn chicken that tasted like rubber, cold chips which nobody bothered to eat and our drinks were HOT.”

The burger shop owner posted a public reply to Ms Linke with an apology: “Very sorry for your experience. We are investigating what has happened, often uberEATS drivers will take on too many orders: and therefore unfortunately deliver food cold.”

Mr Arthurs complained, but there was not much Uber could do to help him.

An Uber Eats account manager wrote to Mr Arthurs in late February:

“We give Eater’s [sic] the ability to rate and leave comments related to the delivery of their order on the app.”

“We hope they choose to leave this type of feedback here and not on Google.

“Unfortunately we cannot stop Eaters from leaving comments elsewhere, and nor can we tell them to remove these comments. I know this is frustrating.”

An Uber spokesperson told the ABC on Friday: “Uber Eats relies on our restaurant partners to make our marketplace work.

“We know there is significant competition for restaurant partners and we will continue to work hard to deliver a great service to those restaurants which choose to use our app.”

ACCC and unfair driver contracts

Uber, along with several other companies, came under the radar of the Australian Competition and Consumer Commission last year as part of its crackdown on unfair contract terms.

The consumer watchdog raised concerns about Uber’s standard contract with its drivers — in particular, a term allowing Uber to terminate the agreement “without cause”.

The company then amended that contract in light of the ACCC’s concerns.

“Uber amended its standard Driver Agreement that allowed it to terminate the agreement ‘without cause’,” the ACCC noted.

“Its right to termination is now limited to certain circumstances including where acting reasonably in order to protect its legitimate interests.”

Unfair terms and restaurants

Mr Robertson believes the terms in the Uber Eats contract place the company at risk of breaching the unfair contract provisions of the Australian Consumer Law (ACL), in particular, the term that gives it the power to vary the contract whenever it likes.

This is in addition to the terms stating Uber does not provide “delivery services”, and clauses which require restaurateurs to take on more responsibility (for “Substandard Meals” and refunds) — despite their lack of control over Uber’s drivers in reality.

He explained that the ACL protects small businesses (20 employees or fewer), who enter contracts that are worth $300,000 or less — or $1 million or less, if the contract term is for more than one year.

“Where there’s a term that results in a real inequality between the parties, and doesn’t reasonably protect the legitimate rights of a business, the ACL can step in to cure the problem in the contract,” Mr Robertson said.

“The parties can seek a [court] declaration to remove that term from the contract.”

The effect of this would mean the offending terms are unenforceable by the stronger party.

Uber denies that the contractual terms for its food delivery app are unfair.

“The terms and conditions for restaurant partners are consistent with Australian law and vital to supporting the thriving marketplace for restaurants, delivery partners and eaters,” Uber’s spokesperson said.

“Restaurants aren’t locked in, just like delivery partners and eaters. If a restaurant does not wish to use the app, they do not have to.”

So what is his advice for businesses which fear they have entered into unfair contracts?

In this specific case, he recommends that restaurants could try “negotiating directly with Uber to vary the terms of the contract”.

But given the “inequality of bargaining power” he mentioned, that is unlikely to succeed.

As alternatives, he recommended lodging a complaint to the ACCC or seeking independent legal advice (provided the restaurant has enough funds for that).

Source: ABC News Australia https://www.abc.net.au/news/2018-04-22/uber-eats-criticised-over-conditions-on-restaurant-owners/9662814

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