Restaurants that had exclusive contracts with iFood have requested that those contracts be terminated over the past three months, resulting in a drop in revenue.
They believe the cuts were retaliation on the part of the app to try to block the advance of a new competitor, 99food, which resumed distribution in October.
Four businessmen with a total of 43 iFood businesses reported. sheet They deactivated their restaurants on the platform and started getting vetoed from promotional activities even though they were eligible.
When a restaurant signs a so-called “full-service” agreement with iFood, the application handles the entire delivery operation. The system has been integrated, and restaurants are now solely responsible for cooking and packaging.
iFood does everything from finding a delivery person to arranging a delivery and processing payments. However, this service is expensive. To download, the application requests exclusive rights from the restaurant. Company cannot exist on any other platform.
This kind of arrangement worked without major problems until this year, says the owner of the restaurant chain, which has eight brick-and-mortar locations and 30 different operations on the app. As iFood’s expansion accelerated, relationships with account executives became difficult, he said. The rate went from 15% per order to 19%.
The businessman, speaking on condition of anonymity (for fear of further damaging his relationship with the application), said that in light of the complaints, he was approached by 99 with an offer that included service charge waivers and other benefits.
The possibility of working on another platform also seemed interesting, and in the first week of August a decision was taken to break the exclusivity and pay the fine stipulated in the contract. The fine was paid and operations were suspended the same day and resumed the next day.
A few weeks later, another surprise occurred. iFood said 20 of its 30 operations were closed on filing because without exclusivity they would lose the right to operate.
This framework has been challenged by businessmen, but the contract is not clear on that point. The restaurant is currently open, but due to a court injunction. Distribution accounts for almost 70% of the chain’s revenue, but promotions and participation outside of the app are now difficult to come by.
iFood said the exclusive agreement includes certain visibility solutions and rewards for the application, including investments in advertising and promotions. The company also said that the rules follow an agreement signed with Cade (Administrative Council for Economic Defense).
“As with any formal partnership, there are contractual consequences for non-compliance with the agreement, including fines and a return to the platform’s standard terms,” he says.
In another case, sheet had access, the exclusivity stipulated in the contract would end in December of this year. Also in August, the owners asked iFood to bring forward the end of the list because they wanted to list three of their restaurants on 99food.
Once the decision was finalized, the fine imposed on the company amounted to R$1.2 million. The three restaurants were shut down on iFood for 15 days and only reopened through an injunction, an early court ruling.
Lawyer Wanessa Magnusson de Sousa, who represented the network in court, said the fine was expected but she considered the amount abusive. The São Paulo court agreed and reduced the financial penalty to R$150,000.
The same thing happens with a 10-store burger chain. The day before the contract was signed, the restaurant was closed. Owners say that without exclusivity, they no longer have access to promotions and problems are harder to resolve, and they now no longer talk to anyone, instead receiving electronic support first through app chat.
Businessmen in this field also reported that an atmosphere of open war between applications is widespread among those working in this field. The message group has received complaints about hidden fees, false advertising, and blackmail.
In court, four applications operating in this field – iFood, 99, Keeta and Rappi – are dealing with legal action. The police have also entered the case and are investigating the matter on suspicion of espionage and unfair competition. A former iFood employee is the subject of an investigation, and last Thursday (6th) it was Keeta’s turn to file a police report.
At Santos on São Paulo’s coast, where the Chinese company began operations last week, women introduced themselves to restaurant managers as if they had come from an app. They used fake badges to gain access to the application’s systems and filmed the screen.
Keeta said the suspects requested “strategic business information such as data on orders received and shipped, financial information, restaurant training, menus, and consumer preferences.”
The dispute over the delivery market was reported to Cade, which decided to monitor the application’s activity in the cities of São Paulo (SP), Santos, and the coastal cities of São Paulo, São Vicente, Goiania (GO), and Rio de Janeiro (RJ).
iFood successfully sued Rappi and 99 in court to stop them from using the iFood brand as a keyword in sponsored links. Rappi sued iFood to prevent the use of the word “turbo” within the service. Ultra-fast delivery, called Turbo, is one of Lappi’s strengths in Brazil. That request was denied.
Also in court, 99 said iFood was pursuing a coordinated campaign to “eliminate the visual presence of the brand” in its bag distribution efforts. In the first judgment, the judge found that this could not be anti-competitive behavior because 99 had done the same thing.
Regarding this action, iFood said that there is no final decision on the case and that it is still being processed. However, “we believe that legal discussions are part of the market environment and are the basis for ensuring healthy and sustainable competition.”
99 says its business model was developed to “give restaurants back choice, fairer prices and tools to drive sales.” The app has multiple plans for changing facility and service fees.
For example, if the in-app price is the same as the salon price, monthly fees or fees may be waived. “99 also employs partial, short-term exclusivity in certain contracts, which is common practice in this sector,” he said.
Last week, a Sao Paulo court blocked a ruling that would have overturned 99 Food’s exclusivity clause. The request for an exclusive veto came from the Chinese giant Quita, which has just arrived in Brazil.
Keeta said he believes 99 Food is infringing on consumers’ freedom of choice by mentioning specific competitors in the clause. Lappi did not respond.
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