Baedal Minjok in dispute again over compensation issue

An employee enters Woowa Brothers' headquarters in Songpa-gu, southeastern Seoul, in this 2019 file photo. / Korea Times file

By Kim Jae-heun

Woowa Brothers CEO Kim Beom-joon

The country's top food delivery player Baedal Minjok (Baemin), operated by Woowa Brothers, is going through its worst half-year since its establishment.

It has only been 10 days since Woowa Brothers canceled its fixed-rate fee system, charging restaurant owners a 5.8 percent commission for advertising, which brought strong backlash.

At the time of the announcement, Woowa Borthers then claimed the new system was aimed at guaranteeing a fair chance for all restaurant owners to advertise their shops. However, local restaurant owners opposed Woowa's system claiming it was nothing but a scheme to receive more commission fees discarding the previous flat sum system.

This time, it is embroiled in a compensation issue in which 10 restaurant owners complained Woowa Brothers did not compensate them adequately and properly for estimated financial damage they suffered when Baemin's server logged them out from the program for 70 minutes last Wednesday.

The accident occurred from 7:10 p.m. to 8:20 p.m., usually the busiest dinner time for South Koreans, according to the restaurant owners.

Shopkeepers argued that they usually take an average 127 orders a day, but on that Wednesday they received 94 orders, which falls short by 33. Ten restaurants have reportedly received 30 percent fewer orders on Wednesday compared to its daily standard in Mapo-gu, western Seoul, only.

Woowa Brothers said 1,400 shopkeepers had suffered some monetary losses due to an apparent server technical problem, which is 1 percent of 140,000 member restaurants in all and it compensated them by waiving ad fees for two days.

According to the contract deal, Woowa Brothers is asked to compensate restaurant owners by granting three hours of ad commission fees for free per one hour of computer error. However, it decided to waive the commission fees for one day only.

However, restaurant owners said the compensation is way too small considering the economic loss they suffered. All the restaurants pay different amounts for ads. A chicken restaurant that pays a daily average of 23,000 won ($18.89) and sells one fried chicken order for 18,000 won ($14.78) minimum, will lose 594,000 won ($487.93) if 33 orders are missed.

The Korea Foodservice Industry Association issued a statement the next day on May 7 saying the victims of Baemin's online technical error had to close early and suffer a one-day loss of sales.

Rep. Choi Seung-jae, previous head of the Korea Federation of Micro Enterprise, said Woowa Brothers did not consider how much money the restaurant owners lost.

“We cannot compensate based on the expected return. We understand the restaurant owners' complaints but we already paid more than we were supposed to by the contract,” a Woowa Brothers official said.

The country's top antitrust regulator has been reviewing German company Delivery Hero's proposed acquisition plan for Woowa Brothers. The review process had taken longer than expected due to concerns about expected consequences after the acquisition is completed in terms of data monopoly and fair market competition.