Just Eat’s change in refund policy leads to nancial pressures for operators.

Just Eat’s change in refund policy leads to financial pressures for operators

Back in October, the takeaway and delivery food platform, Just Eat – enjoyed, and replied upon, by an increasing number operators and customers alike in recent times in order to put them in contact with one another when it comes to ordering up a meal – changed its customer refund arrangements (the situation when a customer has justifiable cause for complaint with their order for some reason, and is therefore due a refund, or some other form of mutually satisfactory way of recompense, such as a part-refund, voucher or replacement item).

Marc Faulkner (director of North Westbased Deli Group, which encompasses Newton Deli, Dentons Deli and Kopi Coffee) says that this recent change has led to a marked increase in the number of customers exploiting this system, and now, in the countdown to Christmas – traditionally the busiest time for operators - the problem does not appear to be abating, but is only getting worse, it would seem.

“We’ve been with them for four years and have a Local Legend status. We get a high volume of business, it’s worked well. It’s not cheap, and there’s massive commission, but it brings in volumes of business so is worthwhile,” says Marc Faulkner, whose particular concern is how Just Eat plan to deal with this problem.

“It’s widespread, and affecting hot fast food evening operators more than sandwich shops necessarily, although it affects us too.

“For the last four years until October, for any issue, a customer could request a refund via an app, contact call centre, online webchat, and it could be done fairly easily in real time direct with operator during your opening hours. And I always encouraged customers to pick up the phone to resolve things directly.

“I was typically refunding £40-50 over a seven-day period, and that was being generous in light of our Local Legend status, but of the 36 separate refund requests I went through recently, I only ended up receiving £11.20 back out of hundreds of pounds.”

When asking why Just Eat implemented this policy change, Marc Faulkner said that he was given the impression that the company felt it had been experiencing an unacceptably high level of refunds. And although an email came out about the new way of doing things, the first his business really knew of it was when they got their statement reflecting the amount taken back for refunds, he reports.

In practice, Just Eat’s policy change would now seem to be causing significant financial problems for his business, Marc Faulkner has found, and many other businesses too who have also been experiencing similar problems. At the extreme, is the case of gourmet burger company, Piggy Wynns in St Helens, which has been forced to close as a result of the knock-on cash flow issues created by this development.

At one point, there was talk of affected businesses forming a support and campaign group in order to move away from the Just Eat platform, or at the very least withdraw from the platform for a while by way of protest, but this is the last thing these otherwise customer-focused and profitable businesses who ordinarily have no problem at all with providing refunds and replacements promptly where legitimately required, really want to have to do in challenging times, particularly when many have just started to recover a little in the wake of Covid and lockdowns.

The change in refund policy centres around the fact that Just Eat has now automated its customer refund process. This means that upon complaint, such as a missing item or allegation of cold food, for example, refunds are issued automatically and directly to customers, without question or fuller investigation, or opportunity to query it more, first, on the part of the operator. And whereas some claims are legitimate, there have been increasing cases of allegations and instances of “cold cans of drink” or “cold ice cream”, for example, and that still get refunded.

In the past says Marc Faulkner, there was at least a notification, awareness and agreement process, backed up by a range of ways to refund, or sort the issue to the mutual, and fair, satisfaction of both parties, he feels, and to some extent there still is, he acknowledges, but after the event, not before.

It would also appear that the entire cost of an order can, and is being, refunded automatically, and all too frequently, it is suggested, for less than convincing reasons, with little time for effective investigation, although Just Eat emphasise that operators can still challenge the refund in question.

The other issue, however, is, whether the refund is a legitimate one, or not, the funds are transferred and refunded automatically as part of this new policy, and if, in turn, customers themselves are under the impression that it’s the much bigger business concern, Just Eat, who are actually having to cover the cost of such refunds, currently it is not the case, points out Marc Faulkner, whose business has been down by in the region £700 a week on occasion.

Indeed, in many instances, most even, many operators affected would no doubt argue, it appears that this ‘no questions asked’ refund policy is increasingly subject to misuse on the part of unscrupulous customers, and now resulting in major, unsustainable cashflow problems for the businesses affected who are suddenly put in the uncomfortable position of being unable to pay their staff, or overheads, when an above average amount of their income in sales gets summarily refunded at the end of a trading week.

When possibly leaving the platform was mentioned to Just Eat, Marc Faulkner claims that he got the impression from

the company that the attitude was “so be it, just return the kit.” He also went on to express the opinion that after being focused on independents and businesses with a small number of shops in its earlier, Hungry House days, Just Eat were now more interested in linking up with McDonalds and KFC who have more resources and can earn far more revenue for the platform. Marc Faulkner says he hasn’t left the platform himself yet as a result of this issue, because Just Eat’s market share is so major and vital to his business, he can’t aff ord to really.

“Just Eat is only successful if our restaurant partners are successful and we have a track record of helping restaurants prosper. The recent measures we’ve put in place are in line with industry standards and are to ensure an even fairer refunds process for all, such as increasing the time for restaurants to raise any disputes,” said a Just Eat spokesperson in a statement.

“Our restaurant partners are always refunded in full when we fi nd any fraudulent activity taking place. We’re keen to maintain an open dialogue with the restaurants on our platform and continue to review our policies and processes in this space to support both customers and restaurants alike.”

Just Eat work with more than 60,000 restaurant partners across the UK and say that they are absolutely committed to supporting them, pointing out that the recent measures introduced as part of their refund policy have been designed to make the process fairer for restaurants and customers alike, in line with industry standards and how other businesses in the food delivery space operate, they claim, having also not seen an increase in refund rates since the measures were introduced, they also claim.

Whilst customer refund requests are processed automatically, they add, restaurants will only be charged if the complaint sits within their control/ responsibility. Restaurants will also have a longer period of time to dispute any refund complaints that come through as it’s really important to them, they state, that their partners are not unfairly fi nancially impacted. Additionally, they say that they have robust measures in place to block activity such as fraudulent orders, including an algorithm to detect irregularities and unexpected behaviour to help block non-genuine orders. Alongside this, they are actively blocking customers who are using credit/debit cards suspiciously, or have suspicious refund rates, they report.

For his part, however, Mark Faulkner feels very strongly that if this issue “doesn’t go away, or get resolved soon”, then the problem created by Just Eat’s new refund policy is a far more drastic and unsustainable situation for smaller businesses such as his own to be placed in, in the long term - much of their resources having already been consumed in staying afl oat during the course of the past 18 months. Add to that the rising problems of supply chain issues, and energy price rises, and food businesses have plenty to contend with in any case right now, he concludes.