A California law that took effect on January 1 has prompted the removal of tens of thousands of restaurants from food delivery apps like SF-based Uber Eats, DoorDash, Postmates, and Caviar. The law, which was approved last fall, requires apps to offer delivery only from restaurants with which they have a direct partnership and to pull listings from any restaurants with which they do not have a current contract.
The legislation was born out of a scandal that began in the Bay Area: In January 2020, Pim Techamuanvivit, the owner of San Francisco’s Michelin-starred Thai restaurant Kin Khao, was stunned to discover that delivery services including GrubHub, Seamless, DoorDash. and Yelp’s delivery platform (also GrubHub, as it purchased Yelp’s Eat 24, then shut it down) were offering food purportedly from her menu for delivery without her permission.
Her angry tweets on the issue shed new light on a common practice for most delivery apps, by which the companies admittedly added restaurants without their permission, an effort to attract customers by seeming to offer deliveries from more restaurants than their competitors. The policy has been a thorn in the side for many restauranteurs, who say that the apps often publish inaccurate or out-of-date menus ... and when the restaurant refuses to serve food from a long-stale menu, the apps place the blame on the restaurants instead of shouldering it themselves.
“As far as the customer knows, the fault is mine,” Eli’s Mile High Club owner Billy Joe Agan told Eater SF when his Oakland bar was unexpectedly descended upon by delivery drivers seeking orders from a menu last used in 2016. “A customer makes an order, they assume it’s made as part of a partnership between Eli’s and an app, and then I’m saying no. Then the delivery app tells the customer ‘They refused your order’ and I’m the asshole, even though I’ve never agreed to be on any of these apps.”
By February 2020, the issue had attracted the attention of San Diego-based California State Assemblywoman Lorena Gonzalez, who proposed Assembly Bill 2149, a law that would block non-consensual app listings. The legislation sailed through the approval process and was signed into law by Gov. Gavin Newsom in September. Its final language states that to list a restaurant on its platform, food delivery apps online company must have a contract with the restaurant “expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility.”
The law, which took effect on the first day of 2021, could have a huge impact on the options available to diners who use these apps — as well as the apps, themselves. According to the Wall Street Journal, as of September, Uber-owned Postmates, for example, boasted 700,000 restaurants on its app. Of those, only 115,000 had a partnership agreement with the app. In California alone, Postmates said in September, 40,000 of the restaurants they list would have to either be converted into paid partnerships or removed.
Other delivery apps, like Doordash, find themselves better prepared for the new law. According to the WSJ, over 95 percent of its Q3 business came from restaurants with which it already had partnerships. Even so, the news of the California law prompted a drop in its stock price, which saw an all-time low of $135.38 after a high of $195.50.