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Berkeley, San Leandro Join Movement to Cap Food Delivery App Fees

Emergency ordinances cap costs to restaurants at 15 percent

Portugal Impacted By Coronavirus
New laws in Berkeley and San Leandro cut the percent delivery apps charge restaurants in half
Photo by Horacio Villalobos#Corbis/Corbis via Getty Images

Three months after San Francisco enacted an emergency order requiring food delivery apps like DoorDash, Uber Eats, and Grubhub to cut the fees they charge restaurants in half, the East Bay cities of San Leandro and Berkeley have followed suit, agreeing this week to require caps to the fees for the duration of the pandemic.

Back in April, San Francisco was one of the first cities in the country to hand down a law requiring delivery apps to cap the fees they charge restaurants at 15 percent. “While some delivery services have waived fees on the customer side” during the coronavirus crisis, San Francisco Mayor London Breed said, “delivery services continue to charge restaurants a commission” of as much as 30 percent of every order. “This commission fee can wipe out a restaurant’s entire margin,” she said.

According to Laurie Thomas, the executive director of the Golden Gate Restaurant Association (GGRA), the city’s lobbying group for the food industry, city officials met with representatives from delivery apps prior to the law, in an effort to address restaurant concerns. Thomas said that restaurateurs she spoke with said the 25 to 30 percent cut most apps take would force them out of business, but a 15 percent fee structure might allow them to scrape out a living. The apps, she said, refused to budge.

Hence the law in San Francisco, and subsequent fee caps across the country, in Portland (10 percent), New York (20 percent), Los Angeles (15 percent), and a multitude of other cities.

The rule has not been without bobbles — for example, Uber Eats stopped delivering food to San Francisco’s Treasure Island area, saying that the fee caps made the company unable to cover operations costs, and Grubhub briefly flouted the law when San Francisco opened outdoor dining. Confusion over fees charged by DoorDash earlier this week also prompted the company to admit that a small number of SF restaurants (fewer than 10, they said) were charged more than 15 percent. Those spots will be refunded, a DoorDash rep told the Chron.

Now restaurants in some Easy Bay cities should brace for similar snags: on Tuesday, San Leandro’s City Council voted to cap the fees these apps charge to restaurants at 15 percent, the East Bay Times reports. The cap will remain in place “until the pandemic ends or shelter-in-place orders are lifted,” a decision that will be made by Alameda County officials.

Also on Tuesday, Berkeley’s City Council unanimously approved a 15 cap on fees, and will cap “other fees” at 5 percent per order. The law will also “prohibit apps from reducing tips for food delivery drivers,” the Daily Californian reports.

Again, spokespeople from delivery companies expressed disappointment at the move, warning that reducing the fees they charge restaurants might prompt them to increase costs for diners.

Alex Knox, executive director of the Telegraph Business Improvement District, had a suggestion for diners who might get hit with increased fees: instead, he says, patrons should order food directly from restaurants when they can, a plan that will both eliminate the delivery fees charged to diners and the cut apps take from restaurants. Local restaurants “need as much support as they can possibly get,” Knox said, and allowing restaurants to keep every dollar diners spend with them is a simple means to that end.