Restaurants that had exclusive contracts with iFood saw their revenues decline after requesting to terminate those agreements in the past three months.
They attribute the reduction to what they see as retaliation on the part of the app, which is trying to contain the progress of its new competitor, 99food, which returned to delivery in October.
Four entrepreneurs, with 43 active iFood operations in total, reported Bound Whose restaurants were deactivated on the platform and began to veto promotional actions, even when they were eligible.
When a restaurant signs a so-called “full service” contract with iFood, the app is responsible for the entire delivery process. The systems are integrated, and the restaurant now only handles the preparation and packaging.
Locating the delivery person, making the delivery, processing the payment, everything is handled by iFood. But the fees for this service are high. For download, the app requires restaurants to be unique – a company cannot be on any other platform.
This type of arrangement went without any major problems until this year, says the owner of a restaurant chain that has eight physical stores and 30 different operations through the app. As iFood expanded rapidly, he said relationships with account executives became difficult. The rate that was 15% became 19% per order.
The businessman, who requested anonymity – fearing that the relationship with the request would deteriorate further – states that in light of this dissatisfaction, 99 contacted him with a proposal that included exemption from service fees and other benefits.
The possibility of working also on another platform seemed interesting and the decision to break the exclusivity and pay the fine stipulated in the contract was made in the first week of August. The penalty was paid and on the same day operations were halted, and resumed the next day.
A few weeks later, there was another surprise. Of the 30 operations, 20 were closed on the app because, according to iFood, without exclusivity they would lose the right to operate.
This framework is challenged by the businessman, for whom this was not clear in the contract. Restaurants are currently active, but by court order. Delivery accounts for nearly 70% of the chain’s revenue, which is now also finding it difficult to join promotions and outside of app windows.
iFood says the exclusivity agreement includes specific visibility solutions and compensation for the app, such as investing in advertising and promotions. The company also indicates that the rules are consistent with the agreement signed with Cade (Administrative Council for Economic Defence).
“As in any formal partnership, failure to adhere to the agreement results in contractual consequences, including fines and a return to the standard terms of the platform,” he says.
In another case where Bound If it is accessible, the exclusivity stipulated in the contract will end in December of this year. Also in August, the owners approached iFood to offer a closing date, as they wanted their three restaurants to be included in 99food.
Once the decision was consolidated, the fine imposed on the company amounted to R$1.2 million. The three restaurants were closed for 15 days on the iFood website, and will only become active again by injunction, i.e. an early court decision.
Lawyer Wanessa Magnusson de Souza, who represented the network in court, says the fine was expected, but she considered the amount arbitrary. The São Paulo Court agreed and reduced the financial penalty to R$150,000.
In a hamburger chain with ten stores, the story is similar. One day before the contract was signed, the restaurants stopped operating. The owner says that without exclusivity he has lost access to promotions, has difficulty resolving issues that are now no longer discussed with anyone, and first resorts to electronic support via app chat.
Businessmen in the sector also reported that a general climate of war between applications is spreading among workers in the sector. In message groups, there are complaints of hidden fees, unauthorized promotions, and threats.
In court, the four apps operating in the sector, iFood, 99, Keta and Rappi, are exchanging legal proceedings. The civil police also entered the case and are investigating suspicions of espionage and unfair competition. Former iFood employees are the target of the investigation, and last Thursday (6) it was Keeta’s turn to file a police report.
In Santos, on the coast of São Paulo, where the Chinese company began operating last week, women introduced themselves to restaurant managers as if they were from the app. Using fake badges, they were able to access the app’s systems and film screens.
The suspects requested “strategic business information, including data on orders accepted and shipped, financial information, restaurant training, menus and consumer preferences,” Keita said.
The dispute over the delivery market reached Cade, which decided to monitor the activities of the applications in the cities of São Paulo (SP), Santos and São Vicente, on the coast of São Paulo, Goiânia (GO) and Rio de Janeiro (RJ).
In court, iFood sued Rappi and 99 to stop using the iFood brand as a keyword in advertising links, and won. Rappi has sued iFood to block the use of the word “turbo” on its services. Ultra-fast delivery, called Turbo, is one of Rappi’s strengths in Brazil. This request was denied.
Also in court, 99 said iFood was promoting a systematic campaign to “eliminate the visual presence of the brand” in bag distribution procedures. In his first decision, the judge held that 99 was doing the same thing and, therefore, there was no way this could be an anti-competitive practice.
Regarding procedures, iFood says the cases have no final resolution and are still being processed. However, it states that it considers “legal discussions to be part of the market environment and considers them essential to ensuring healthy and sustainable competition.”
99 says its business model was developed to “give the power of choice back to restaurants, offering fairer prices and tools that drive sales.” The application contains more than one plan type for establishments and changing service fees.
If the price in the application is the same as the price in the salon, for example, there may be an exemption from monthly fees and commissions. He adds, “99 also adopts partial and short-term exclusivity agreements in specific contracts, which is a common practice in this sector.”
Last week, a São Paulo court blocked a decision that struck down 99food’s exclusivity clause. The request to object to exclusivity came from Keita, the Chinese giant who has just arrived in Brazil.
Kita said it considered that by mentioning a specific competitor in the clause, 99food violated the consumer’s freedom of choice. Rabbi did not respond.
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