If Sales Are Up, Why Oppose It? Restaurant Owners Explain Their Opposition to "Free Delivery"

Small Business Owners Warn: "Costs Passed on to Store Owners and Consumers"
Total Fees Increased by Up to 30% After Free Delivery Introduction

Choi Jungho, who runs a Japanese-style rice bowl restaurant in Gangseo-gu, Seoul, recently canceled his subscription to a free delivery-linked pricing plan offered by a delivery application (app). This was because, after subscribing to the plan, the commission fees and delivery charges payable to the delivery app ballooned. The commission fee for the plan (including VAT) is 10.8%, and the delivery cost borne by the store owner (in Seoul) is 3,400 won. For example, if he sells a set rice bowl meal for 12,000 won, he would have to pay 4,700 won—about 40% of the sales price—in commission fees and delivery charges.

Choi said, "In the early days of introducing free delivery, orders surged and the store seemed to benefit," adding, "However, while sales increased, the actual profit left in hand decreased. The more I sell, the more I lose."

A self-employed person running a delivery-only restaurant in Seoul is packaging food. Photo by Jo Yongjun

According to industry sources on the 26th, concerns are growing among self-employed business owners and small merchants as Coupang Eats, the No. 2 player in Korea's delivery app market, has abruptly expanded its free delivery service, previously limited to paid members, to all general users, with Baemin, the No. 1 company, joining in. There are growing voices warning that as free delivery expands, delivery apps may sharply raise commission fees and various marketing costs, fully passing these expenses on to both business owners and consumers.

Through an official statement, Coupang Eats explained, "We have created this win-win promotion to reduce consumers' delivery costs and support increased orders for partner stores during a period of high inflation and fuel prices," adding, "A comparison of partner stores' sales over the year before and after introducing free delivery showed a 98% increase in sales per store after the promotion."

However, among small business owners, concerns are rapidly spreading that Coupang Eats' new move could trigger a race for free delivery among delivery apps, ultimately increasing the burden on store owners. In March 2024, Coupang Eats became the first in the industry to offer free delivery to its paid 'Wow' membership subscribers. Since then, competitors like Baemin and Yogiyo have rushed to overhaul their commission policies to accommodate free delivery, causing the costs borne by partner stores to surge.

According to the "Baemin Commission Cost Burden Status Report" released by the civic group People’s Solidarity for Participatory Democracy last year, the total costs (including commission fees, payment processing fees, and delivery charges) that partner stores must bear increased by more than 3 percentage points from 2023 to 2025, with the average total commission rate reaching 26%. In particular, for lower-priced categories—where most partner stores operate and menu items are under 20,000 won—the total commission burden rose to as much as 30%. During the same period, the price of food paid by consumers increased by 2,190 won.

As the parent company, Germany's Delivery Hero, has put Baemin operator Woowa Brothers up for sale, there are growing expectations that if Baemin aggressively launches countermeasures to bolster its market value, the burden on small business owners will only increase.

An industry insider explained, "From Coupang Eats' perspective, Baemin being up for sale is seen as a critical turning point that could reshape the future market landscape," adding, "With promotion wars that verge on loss-leader competition expected, the trend of passing costs onto small business owners is likely to intensify."

This content was produced with the assistance of AI translation services.