TODAY |

Uber Eats alternative Eat Local NZ may shut after breakdown of partnership with Australian start-up Mr Yum

A Kiwi-built web service touted as the alternative to Uber Eats says it may be forced to shut and has set up a crowdfunding page after an Australian partner backed out of good faith agreements.

A chef preparing food at a restaurant. Source: istock.com

However, the Melbourne-based start-up involved says the situation has been misrepresented.

Eat Local NZ, launched during Covid-19 Alert Level 4 lockdown, was meant to rival Uber Eats by charging eateries a lower commission rate of five per cent per transaction for pick-up and delivery. After using e-commerce software Shopify, it was meant to re-launch on Monday in New Zealand with Australian platform Mr Yum.

But, Eat Local NZ founder Tim McLeod said in a social media post yesterday he was “devastated and sad to announce that today might be the end of Eat Local NZ” after Mr Yum backed out of their collaboration. Its website today said it had suspended trading.

He said this had happened because Mr Yum felt it was “misaligned with [Eat Local NZ’s] business values”.

“In my opinion, it seems pretty clear they can make more money without us and social programs like Local Legends,” he wrote. Eat Local NZ’s Local Legends programme was designed to support people whose incomes were affected by Covid-19 by giving away one per cent of its profits to Kiwis and community programmes.

Mr McLeod said Mr Yum approached Eat Local NZ about a partnership soon after its May 4 launch.

“They believed in our values and our mission to help NZ small businesses, support Kiwis who’ve lost jobs, lift delivery drivers above minimum wage and create a new New Zealand.

“After unsuccessful attempts to unite NZ based tech businesses we were excited to find a business so close to NZ that appeared to share our values.”

He said he spent four weeks building up to Monday’s re-launch, but was then "locked out" of Mr Yum’s platform. 

What followed was an email from Mr Yum on May 31 “saying they are going to enter NZ without us, and then offered to buy Eat Local for AU$10,000 (NZ$10,700)”, he said.

“I made the bold (some would say dumb) call to put everything we had into this partnership and rely on our good faith agreement. 

“We stopped any improvements to Shopify ... and put everything we had into Mr Yum. We spent weeks building tech that would extend and improve their platform, we gave them all of our venue data to migrate, our team spent hundreds of hours setting up venues on the Mr Yum platform and so much more.”

Mr McLeod added: “Honestly I feel like a total fool, I feel broken, I feel defeated, and just want to give up. But there’s another part of me that still wants to fight for everything I believe in and why this whole thing started in the beginning.”

Eat Local NZ launched a GoFundMe page today, with Mr McLeod pledging he would “dedicate everything I have” to relaunch Eat Local NZ.

But Mr Yum co-founder Kim Teo refuted Mr McLeod’s statements.

Ms Teo told 1 NEWS there was a “misalignment [with Eat Local NZ] where we wanted to take the product”, which led to the dissolving of the agreement.

“We had a draft agreement and we were working together in good faith while getting it finalised because legal can take a while,” she said.

“And then [last] weekend, it really came to the point where it was really clear that what we thought we were signing up for is not what he wanted us to be doing.”

She said some of the disagreement around the product came as Mr Yum’s focus was building a web-based management platform aimed at venues which offered them pick-up, delivery and a QR code table-ordering system from a customer’s own device.

Eat Local NZ was focused on building a marketplace that helped customers find restaurants, and that had the agreement continued, Eat Local NZ would’ve continued owning this, Ms Teo said.

“When he says he spent three weeks working on the tech, he spent three weeks working on the marketplace which is the IP he owns and the IP he will continue to own.

“It has nothing to do with us.”

She said she had only revoked Mr McLeod’s access to Mr Yum’s side of the product.

“I didn’t try and reverse access to something that he had created.”

In regards to Mr McLeod’s statement that Mr Yum didn't support its Local Legends programme, Ms Teo said “we’d taken that on … and put that into our draft agreement.”

She said it also wasn’t until later on in the agreement that Mr McLeod asked for the platform to be “white-labelled” which could allow the final product to all appear as coming from Eat Local NZ. White-labelling allows another brand to make it appear as if a product produced by one company had been created by them.

“We never planned on changing the domain from mryum.com,” Ms Teo said.

“If that was [Eat Local NZ’s] plan initially, we probably wouldn’t have done it because we’ve been approached by heaps of overseas partners to white-label our tech, but we never said yes.”

However, she said Eat Local NZ’s branding and domain was always going to be used in the customer-facing marketplace side of the product.

Ms Teo also said Mr McLeod had misrepresented the AU$10,000 offer she made during the week.

“The first option we presented was we could part ways and we won’t contact any of the vendors on the list of 800 venues [belonging to Eat Local NZ] and Eat Local NZ could continue building their own brand as their own platform.

“Option B was if he didn’t want to do Eat Local anymore, that we would look at acquiring it.”

She said option B came with the AU$10,000 upfront offer, plus 20 per cent of the revenue share for 12 months.

Ms Teo said Mr McLeod asked for a day to think about option B because Mr Yum’s offer “wasn’t even a final offer”. 

But, since then, she said she’d been having difficulty reaching Mr McLeod and had tried to call, text and email him multiple times.

Ms Teo said Mr Yum didn’t have plans to “actively” enter the New Zealand market as it already had a small presence in the country supporting Australian businesses with stores in New Zealand.

“He could have continued to build a Eat Local NZ without us and we wouldn’t have held him back or we wouldn’t use any of his content — the venues on the list. He never shared the customer list.”

She said during the partnership, Mr Yum shared “all of our learnings. We even put future product designs into a folder that they had access to”.

Ms Teo said she never had access to Eat Local NZ’s New Zealand codebase or website, but did have access to its list of venue emails, phone numbers and information from its Shopify platform “because we were uploading them and creating user accounts [on the Mr Yum platform]”.

She also refuted that Mr Yum had reached out to Eat Local NZ first. Ms Teo said Mr McLeod had reached out to her via LinkedIn and provided screenshots to 1 NEWS appearing to support this. 

1 NEWS had tried multiple times to contact Mr McLeod since yesterday morning for comment, but has been unable to reach him. 

However, Mr McLeod told The Spinoff Mr Yum and Eat Local NZ had conflicting understandings of their agreement and different expectations of what the end product would be. 

He said he was happy to make the correction regarding the AU$10,000 offer, but said it didn’t change the nature of the post. 

He also said he didn’t think about selling Eat Local NZ.

Mr McLeod said he understood customers would use the Eat Local NZ website and URL while scanning menu QR codes, rather than be directed to a Mr Yum URL. 

However, he told the Spinoff “Mr Yum said that wasn’t really an option they were going to consider”.

His marketing materials for the intended June 8 relaunch showed the collaboration would use the Eat Local NZ branding but was “now proudly powered by Mr Yum” instead of Shopify. 

“They said they didn’t feel that we were aligned to their business values, which we didn’t think changed at all,” Mr McLeod said.

“The only thing that seemed to be different was backing away from using the local brand and URL. 

“They started talking about how they were already commencing trade in New Zealand and their brand looked to be resonating well.”

Mr McLeod said he was also still open to working with Mr Yum. 

In regards to who approached who first, Mr McLeod released a statement this morning which said that he had, indeed, approached Mr Yum first.

He wrote Mr Yum wasn’t initially interested but had “only approached me again after we launched in New Zealand with a wave of public support”.

In regards to Mr Yum’s offer, he said: “The offer of a 20 per cent revenue share required my team members to go out and sign up venues on Mr Yum. 

“My team would have to work, get paid less than we were offering Local Legends, and get nothing if no venues signed up. I see this is separate to an offer to buy Eat Local NZ for AU$10,000.”

Mr McLeod also said Mr Yum didn’t tell him they wouldn't use his venue data.

“They told us ‘we won’t contact any of your database venues in near future’ which, along with various other statements about how well the Mr Yum brand was being received in New Zealand, left me with a clear understanding they intended to enter New Zealand and contact our venues,” he said.

Mr McLeod said he wanted to thank Kiwis “for the amazing response to our situation” and called “for calm and kindness”. 

“I do not want to get into any tussle with Mr Yum."

He said while he could file a legal claim against Mr Yum, “it would likely be messy and complex”.

“I would prefer to focus on working with New Zealand to build a positive future together.”

Mr McLeod added: “I think these matters are better put to rest and I would like to call on everyone to move forward.”