Restaurants accuse iFood of threatening fee increases for those who do not renew exclusivity – 10/02/2023 – Market

Restaurant owners accuse iFood of pressuring them to adhere to an exclusive contract. According to reports, the application has threatened chains with less than 30 establishments by increasing the fee charged.

The complaints come to light at a time when an agreement signed between Cade (Administrative Council for Economic Defense) and iFood comes into force to avoid anti-competitive practices. Since Sunday (1st), the application follows new rules regarding exclusivity contracts.

The agreement was signed in February and will be valid for 54 months (4 and a half years). According to the agreement, iFood cannot sign an exclusive contract with chains with more than 30 restaurants.

In the case of networks with less than 30 units, the rules are more flexible. The exclusivity can be valid for two years, but then there is a one-year quarantine, in which the restricted contract with iFood is vetoed. This quarantine, however, has a loophole.

The company benefits from an exception, which allows the contract to be renewed as long as iFood makes investments in the partner and guarantees a 40% increase in sales on the platform above market growth in the previous year.

The pressure, according to reports, is for companies to remain exclusive. As a result, the application would continue to charge lower fees for services charged on its platform.

“We have observed that independent establishments that had an exclusive contract with iFood are being pressured, since, when leaving the exclusivity environment, the rate increases by 5 to 7 percentage points. This represents an increase of 30% to 40% in rates”, said Paulo Solmucci, executive president of Abrasel (Brazilian Association of Bars and Restaurants).

In these cases, the fee charged by iFood would rise from approximately 17% to approximately 23% on each sale. This movement was also reported to Sheet by other representatives of establishments, who did not wish to be identified.

iFood’s Vice President of Restaurants, Arnaldo Bertolaccini, said that the company follows the rules agreed with Cade. “The restaurant has the option to enter with or without exclusivity. At times of renewal, it has the option of operating cheaper, exclusive and more expensive non-exclusive”, he stated.

For him, the main attraction of exclusivity is not the lower rate, but the additional services offered by the company, such as cheaper financing than from banks. “Today it works much better with the restaurant asking [a exclusividade antes de o iFood oferecer]”, said Bertolaccini.

Cade closed the agreement with iFood because “these chains are considered strategic in the composition of the portfolio of online food delivery marketplaces”.

The agreement with the antitrust body also established limits for iFood’s business volume linked to exclusivity commitments at both national and municipal levels, in the case of cities with more than 500 thousand inhabitants.

Another point prohibited iFood from asking restaurants not to carry out promotions on rival applications and also commitments with establishments so that they have the majority of their business on the sector leader’s platform.

The representation against iFood was forwarded to the antitrust body by Rappi, the application’s main competitor in the meal delivery segment. Later, other companies and entities, such as Abrasel, also became interested.

Based on this representation filed in 2020, Cade decided to investigate alleged violations of the economic order in the national market of online food delivery marketplaces.

At the time of signing the agreement, the municipality pointed out that there were “indications that iFood was abusing its dominant position, through the imposition of exclusivity commitments on restaurants registered on the platform, and other practices that would have the same purpose”.

“Such conduct would be raising barriers to the entry of new competitors into the market and would have exclusionary effects,” he added.