This Saturday (September 30th), the iFood ends exclusivity contracts with chain restaurants with more than 30 stores, fulfilling the agreement made with CADE (Administrative Council for Economic Defense, which ensures free market competition) in February 2023.
In these exclusivity contracts, restaurants undertake not to carry out their delivery operations on other platforms in exchange for investments from iFood and different commercial conditions — a legal practice and in accordance with Brazilian competition legislation.
“Since signing the agreement, we have been focused on implementing a robust strategy to continue growing and generating positive results”, says Arnaldo Bertolaccini, vice president of restaurants at iFood.
“Even without exclusivity, we will continue to help our partners with more than 30 stores to thrive in delivery and offering products and services relevant to the profile of small and medium-sized entrepreneurs, who represent 70% of establishments registered on the platform.”
These are services such as access to credit, cheaper input, customization of marketing investments, efficient logistics and access to a base of more than 43 million customers, the executive lists.
What iFood offers to restaurants
In the following interview, Arnaldo explains what will change after the agreement, what iFood offers to restaurants and what is the strategy to boost small and medium-sized entrepreneurs.
iFN – What has changed since the agreement with Cade?
Arnold – In February, when the agreement was signed, we made a plan to have the least possible impact on these networks after the contract was adapted. We have been working to adapt our business model to the new rules, aware that since before the agreement, iFood was already establishing healthy competition with other players and that the new rules bring more clarity and legal certainty to the entire sector.
Since signing the agreement, we have been focused on implementing a robust strategy to continue growing and generating positive results. We are committed to outperforming the market with these exclusive restaurants.
Restaurants continue to work with us regardless of whether they have exclusivity or not. Throughout this adjustment period, between April and September, order volume increased by 10%. This shows that we are on the right path to conquer both restaurants and attract consumers.
Source: IPEC Research (2023)
We are the biggest and best delivery platform in the country, which actively listens to restaurants to offer solutions based on your pains. Therefore, Cade's agenda did not distance us from restaurants, but intensified our relationship with them.
We believe that the agreement with Cade and regulating the work of delivery people will bring more legal security to the sector, which is beneficial for the entire ecosystem. We will maintain sustainable growth together with our partners and continue to offer the highest quality service, always looking for improvement and innovation.
iFN – After the agreement, how will iFood maintain its leadership in the delivery market with restaurants?
Arnold – We will continue with our commitment to developing a platform with sustainable growth, offering the best delivery solution for couriers, consumers and restaurants.
We have been working closely with partner restaurants, actively listening to this public, to ensure that they will continue to receive the best service from us, even without the exclusivity contract, and have the least friction possible. The ability to adapt, like a good Brazilian company, it’s in our DNA.
Let's support small and medium-sized entrepreneurs even more. In addition to technological tools, training, subsidies for promotions and a wide network of suppliers, iFood will expand the credit line aimed at this audience that, traditionally, faces challenges in obtaining capital to expand the business.
Source: iFood
We have created initiatives to reduce the cost of these restaurants, including offering credit at rates lower than those practiced by the market. Our main differentiator is attractive rates for a sector that faces challenges in raising funds in the banking sector and, without this, is unable to expand or give dynamism to its business.
We started with loans worth R$ 20 thousand for small entrepreneurs and today we provide credit of up to R$ 2 million. We currently have 100 thousand active accounts and an average of R$ 50 million credits per month. iFood also plays a role in the banking inclusion of many entrepreneurs: 17% of customers who use the service currently did not have a bank account.
iFN – Today, what does iFood offer to restaurants?
Arnold – We have a strong agenda to make the delivery food option cheaper and more accessible and the best way to do this is to help the restaurant operate more efficiently.
To this end, restaurants that are our partners have access to a series of benefits, such as free training in marketing and management, technological tools that enable digitalization, a line of credit aimed at small and medium-sized businesses with attractive rates, in addition to visibility and reach among the brand's more than 43 million customers.
We also provide Artificial Intelligence tools to support the expansion of small and medium-sized businesses. By automating processes, we help establishments reduce costs and errors, as well as opening up the possibility of working with a greater volume of orders.
In the field of education, one of iFood's main commitments, we offer the iFood Takes Off, a platform with free trails and courses in different areas. There are more than 70 courses, with service techniques and sales growth, waiter training and even content on gastronomy.
Source: iFood
Not surprisingly, a survey we carried out in March this year with our partners shows that 74% agreed that iFood is a partner for Brazilian entrepreneurs and 64% said that iFood generates more return for the business.
iFN – Could the agreement lead to an increase in fees charged to restaurants?
Arnold – iFood was already carrying out an analysis of the contracts, which highlighted some imbalances. With the beginning of the agreement, it was necessary to equalize rates.
For the vast majority of establishments there was no change, as they were already within the equilibrium margin. The partners who had different commercial conditions due to exclusivity are a small part of the base, and underwent a personalized analysis to identify whether there was a need to rebalance the values practiced in the new scenario.
Source: IPEC research (2023)
The discount on standard rates is one of the benefits granted by iFood to exclusive partners. That said, restaurants that became exclusive – respecting the criteria determined by the agency – had their rates reduced.
It is important to emphasize that there was no adjustment in the commissions charged by iFood and that there is no “new” standard tariff. The commissions are the same as those already practiced before the agreement with Cade.
