In response to recent regulations, food delivery platforms to change how they treat restaurants and delivery workers

March 4, 2022 0 Comments

Meituan and Eleme, two major food delivery platforms in China, have recently taken a step to treat restaurants and food delivery workers better. On March 1-2, Meituan, Eleme respectively announced their commission reduction policies. Both said that for all food and beverage merchants located in areas affected by the pandemic after January, the commission fee would be reduced by half and capped at 1 yuan per order. 

Eleme also announced that all businesses located in areas classified as high-risk from January to February this year would get a refund on commission fees, amounting to a total of 20 million yuan. In addition, Eleme will continue to provide “shutdown protection mechanisms” for epidemic-affected businesses to protect the rights and interests of businesses that shut down temporarily due to the epidemic. 

Meituan announced that it would assess restaurants’ operating status and reduce commission fees to a maximum of 5% for those struggling to stay afloat. It will also provide free “food delivery butler services” to help merchants with insufficient business capacity increase revenue. The services will include accessible cloud printers and “chucanbao”, a smart device that better utilizes delivery workers. 

Eleme and Meituan’s moves came after industry regulators issued a notice which stated platform companies should further reduce merchant service fees to lower the operating costs of food delivery merchants. 

Merchants are not the only ones seeing changes. On March 3, Meituan announced via its official WeChat account that it promotes a new set of rules to evaluate food delivery workers’ performance.

In the past, Meituan food delivery workers would have their pay deducted if they failed to complete an order on time or received a negative review from customers. Meituan has rolled out and is test running a new set of rules in Shaoxing, Taiyuan, Kunming, and 13 other cities in China. The new performance evaluation mechanism will replace “deducting pay” with “deducting points”, and the service quality of the workers will be evaluated according to the accumulated points throughout the month. Food delivery workers can also get more points by getting positive reviews, completing safety training, and performing exemplary tasks. No points would be deducted under extreme weather circumstances. 

According to Meituan, 80% of their food delivery workers were satisfied with the updated rules. “The purpose of algorithms and mechanisms is to better serve people, to enhance the user experience, to ensure the workers’ safety, and to support the merchant’s business. We are working hard to make the technology and mechanisms more scientific and warm,” said Meituan. 

Meituan’s change of performance evaluation mechanism comes after a new regulation on the use of algorithms came into force on March 1. The “Internet Information Service Algorithm Recommendation Management Regulations” clearly bans the creation of illegal and unethical algorithm models. Violations of the regulation result in fines or criminal charges.

Previously, the commission fees of food delivery platforms such as Meituan and Eleme were ghastly high. For example, Meituan’s commission rates rose from 1.1% in 2015 to 12.6% in 2021, and the commission for new restaurant merchants was up to 26%. Delivery workers were struggling as well. According to an article by Renwu Magazine published in 2020, food delivery workers were only allowed a “late rate” of 3%. 

Failing to meet that standard would result in punishment for everyone working at the delivery station. The strict standard prompts delivery workers to break traffic rules, risking safety in order to avoid punishment. In the first half of 2017, data from the Shanghai Public Security Bureau Traffic Police Headquarters showed that there was an average of 1 delivery worker casualty in Shanghai every 2.5 days. In 2018, data from Chengdu traffic police show that there was an average of 1 delivery worker casualty per day due to traffic violations. 

Since the pandemic, the food delivery industry in China suffered a new challenge – the loss of customers. According to data provided by Meituan, in February 2022, the number of merchants with monthly accumulated transactions of less than 5,000 yuan was  540,000. 

The recent changes made by Meituan and Eleme will likely improve the situation for food delivery workers and merchants, and bring them a much-needed sense of relief given their struggles since the pandemic.

Photo by Marissa Lewis on Unsplash

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