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To aid struggling restaurants, county to limit third-party delivery fees

Konditorei, a coffee shop in Portola Valley, shown here in March, reduced its service earlier this year to take-out only due to the COVID-19 pandemic. Photo by Sammy Dallal.

Before this week, if you were to place a $100 order from your favorite local restaurant and had it delivered through a delivery app, up to $30 of it would never go to the restaurant, but would be kept as a commission fee by the delivery app company.

Effective Nov. 17, that amount was capped at $15, based on a unanimous decision by the San Mateo County Board of Supervisors voted unanimously to implement a temporary emergency ordinance that restricts the fees that third party operators that coordinate food deliveries – like UberEats, DoorDash or Grubhub – can collect from restaurants.

Such delivery coordination companies regularly charge restaurants upwards of 30% per order, according to Lauren Carroll, a County Counsel fellow.

Under the county's cap, delivery services fees are limited to no more than 15% of an order for delivery orders and 10% for pickup orders. The ordinance applies to all restaurants in San Mateo County, as well as to customers who order at county restaurants from outside of the county. The delivery-coordination companies are also prohibited from reducing the pay provided to delivery drivers as a result of the regulation. In addition, they are required to provide an itemized breakdown of all charges and fees to customers.

The ordinance is set to expire June 30, 2021 or whenever the supervisors declare the COVID-19 emergency to be over. If the regulation isn't followed, restaurants may bring lawsuits against the delivery companies and recover attorney fees, Carroll explained.

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"Keeping restaurants in business is important for the local economy, and reasonably priced restaurant delivery options ensure that people who are homebound during this pandemic can get fresh meals brought to their doors," said Supervisor Carole Groom, who cosponsored the regulation, in a press statement.

Restaurants, now more than ever, are reliant on takeout and delivery orders to stay afloat, staff noted. As winter approaches, outdoor seating is likely to be less appealing, and as the pandemic surges, indoor seating is likely to be unappealing to customers, severely limited, or not permitted at all.

"We feel like this emergency ordinance is at least a small way to level the playing field for these restaurants," said Don Cecil of SAMCEDA, the San Mateo County Economic Development Agency. "Many will not make it, but this is one way to help those that will to survive the winter."

San Mateo County joins a number of other jurisdictions throughout the region and U.S. in pursuing such caps, including San Francisco, Los Angeles, New York, Seattle and Washington D.C., as well as Alameda County, Marin County, Berkeley, Oakland, Santa Clara, Fremont, South San Francisco and Millbrae, according to county staff. In larger cities where such ordinances have already been passed, for instance, in Portland and Los Angeles, there have been reports of some restaurants alleging that the companies have been slow to respond to the legislation and adjust their fees.

While Millbrae's ordinance exempted chain restaurants from the ordinance, San Mateo County ordinance takes precedence over the city's, so Millbrae's exemption for chain restaurants will end, county Counsel John Beiers noted.

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To aid struggling restaurants, county to limit third-party delivery fees

by / Almanac

Uploaded: Wed, Nov 18, 2020, 11:28 am

Before this week, if you were to place a $100 order from your favorite local restaurant and had it delivered through a delivery app, up to $30 of it would never go to the restaurant, but would be kept as a commission fee by the delivery app company.

Effective Nov. 17, that amount was capped at $15, based on a unanimous decision by the San Mateo County Board of Supervisors voted unanimously to implement a temporary emergency ordinance that restricts the fees that third party operators that coordinate food deliveries – like UberEats, DoorDash or Grubhub – can collect from restaurants.

Such delivery coordination companies regularly charge restaurants upwards of 30% per order, according to Lauren Carroll, a County Counsel fellow.

Under the county's cap, delivery services fees are limited to no more than 15% of an order for delivery orders and 10% for pickup orders. The ordinance applies to all restaurants in San Mateo County, as well as to customers who order at county restaurants from outside of the county. The delivery-coordination companies are also prohibited from reducing the pay provided to delivery drivers as a result of the regulation. In addition, they are required to provide an itemized breakdown of all charges and fees to customers.

The ordinance is set to expire June 30, 2021 or whenever the supervisors declare the COVID-19 emergency to be over. If the regulation isn't followed, restaurants may bring lawsuits against the delivery companies and recover attorney fees, Carroll explained.

"Keeping restaurants in business is important for the local economy, and reasonably priced restaurant delivery options ensure that people who are homebound during this pandemic can get fresh meals brought to their doors," said Supervisor Carole Groom, who cosponsored the regulation, in a press statement.

Restaurants, now more than ever, are reliant on takeout and delivery orders to stay afloat, staff noted. As winter approaches, outdoor seating is likely to be less appealing, and as the pandemic surges, indoor seating is likely to be unappealing to customers, severely limited, or not permitted at all.

"We feel like this emergency ordinance is at least a small way to level the playing field for these restaurants," said Don Cecil of SAMCEDA, the San Mateo County Economic Development Agency. "Many will not make it, but this is one way to help those that will to survive the winter."

San Mateo County joins a number of other jurisdictions throughout the region and U.S. in pursuing such caps, including San Francisco, Los Angeles, New York, Seattle and Washington D.C., as well as Alameda County, Marin County, Berkeley, Oakland, Santa Clara, Fremont, South San Francisco and Millbrae, according to county staff. In larger cities where such ordinances have already been passed, for instance, in Portland and Los Angeles, there have been reports of some restaurants alleging that the companies have been slow to respond to the legislation and adjust their fees.

While Millbrae's ordinance exempted chain restaurants from the ordinance, San Mateo County ordinance takes precedence over the city's, so Millbrae's exemption for chain restaurants will end, county Counsel John Beiers noted.

Comments

David B
Registered user
Portola Valley: Central Portola Valley
on Nov 18, 2020 at 12:20 pm
David B, Portola Valley: Central Portola Valley
Registered user
on Nov 18, 2020 at 12:20 pm
13 people like this

So: we want more people ordering takeout from more restaurants to keep them in business, so let's artificially cap the revenue of the (unprofitable) companies that make that possible, but tell them they can't reduce their costs. That's just dumb.


Brian
Registered user
Menlo Park: The Willows
on Nov 18, 2020 at 12:45 pm
Brian, Menlo Park: The Willows
Registered user
on Nov 18, 2020 at 12:45 pm
15 people like this

The delivery fee is only a small part of how the delivery services like GrubHub, UberEats and the others make money. If you compare the prices on the food on their sites versus what is listed on the restaurant site, the delivery services add a premium to each disk. What costs $12.00 in a restaurant is listed for $14.00 on the different delivery sites. So you pay a delivery fee, a service fee and extra for each item you ordered. The restaurant get less per item ordered and none of the other fees. The delivery services are like a parasite on the restaurants. I prefer to just order take out and go pick up my food. When I leave the tip I know it is going to help the people at the restaurant and not go into corporate profits.

If these companies can not make a profit from the fees they are already charging maybe they should reexamine their business model.


Brian
Registered user
Menlo Park: The Willows
on Nov 18, 2020 at 1:00 pm
Brian, Menlo Park: The Willows
Registered user
on Nov 18, 2020 at 1:00 pm
12 people like this

My mistake, I was incorrect in my example where I said the restaurant charges $12 but the delivery service lists the same item for $14. I just checked Shiok Kitchen, since it is in Menlo Park. They list Duck Garlic Noodles for $16.00 while Uber Eats charges $19.00 for it from Shiok. Beef Rendang lists for $15.00 while Uber Eats charges $23.00!. Laksa is $14.00 on Shioks site and $19.00 on Uber Eats. On top of that there is the Service fee and Delivery Fee.

Uber Eats is the only food delivery service I have installed but I would love to hear what others charge for these dishes if anyone has time to look them up.


dana hendrickson
Registered user
Menlo Park: Central Menlo Park
on Nov 18, 2020 at 1:01 pm
dana hendrickson, Menlo Park: Central Menlo Park
Registered user
on Nov 18, 2020 at 1:01 pm
8 people like this

What is the difference between delivery and pick-up orders?

"15% of an order for delivery orders and 10% for pickup orders."


Brian
Registered user
Menlo Park: The Willows
on Nov 18, 2020 at 1:22 pm
Brian, Menlo Park: The Willows
Registered user
on Nov 18, 2020 at 1:22 pm
14 people like this

Dana,

Some of the delivery services let you use their site to order pickup and they charge you for that privilege. I am not sure why anyone would choose to do that because in my experience they also charge more per item, as noted above. Just deal directly with the restaurant so they get the money and can stay in business.


TechStock
Registered user
Atherton: West of Alameda
on Nov 18, 2020 at 5:02 pm
TechStock, Atherton: West of Alameda
Registered user
on Nov 18, 2020 at 5:02 pm
8 people like this

I have started asking my favorite restaurants whether they prefer that I call them directly to order takeout (which means no payment to a delivery service) or order through a third party. Different places have given me different answers - so I presume that some restaurants are happy giving up some profit in order to off-load the job of processing orders. Others prefer that I call them directly and just come pick up the food.


awatkins
Registered user
Woodside: Skywood/Skylonda
on Nov 18, 2020 at 10:41 pm
awatkins, Woodside: Skywood/Skylonda
Registered user
on Nov 18, 2020 at 10:41 pm
12 people like this

Thank you David B. It never fails to amaze me that apparently-intelligent people think they can heavy-handedly intervene in a free market and not ruin it. We should require elected officials to pass a basic economics test.

Now, sit back and watch delivery services become scarce.


awatkins
Registered user
Woodside: Skywood/Skylonda
on Nov 18, 2020 at 10:44 pm
awatkins, Woodside: Skywood/Skylonda
Registered user
on Nov 18, 2020 at 10:44 pm
10 people like this

Kate — how could you publish this without interviewing some delivery people?


Local94025
Registered user
Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Nov 19, 2020 at 5:01 am
Local94025, Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
Registered user
on Nov 19, 2020 at 5:01 am
11 people like this

Good for the county! Bravo.
I am tired of these "app" companies taking advantage. To use their words against them, "they are just an app, not an employer." So yeah, they are making big money off the labor of others. Thank you Brian for doing the math. We all know theses app companies can afford to pay hundreds of millions to fight propositions to pay their work force as employees and what industry wouldn't love to not have to abide by employee laws, but I digress. It is an industry that needs regulation. The "free market" economics and Reganomics work very well for income inequity, there is plenty of money to be made without prive gouging and manipulation like the up charging. These companies are not going anywhere - That was a bluff


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