In a move to help local restaurants shifting to an off-premises only model, San Francisco instituted a temporary 15 percent cap on third-party delivery fees.
“Restaurants across San Francisco are struggling to stay open. In these tough financial circumstances, every dollar counts and can make the difference between a restaurant staying open, or shuttering. It can make the difference between staying afloat or needing to lay-off staff,” San Francisco Mayor London Breed said in a statement.
The temporary order will be in place for the duration of the city’s shelter in place order or until restaurants are allowed to reopen dining areas. The order affects third-party delivery companies like DoorDash, Grubhub, Postmates, and Uber Eats.
In the announcement, the city said while some delivery providers have waived fees for customers, delivery companies are continuing to charge restaurants a commission that ranges from 10 to 30 percent. It added that commission fees can represent a large portion of a restaurant’s revenue and can wipe out a restaurant’s entire margin.
Eater reported that Grubhub sent an email to users speaking against the cap on fees. The message said the cap will increase customer fees by $5 to $10.
Earlier in the month, Grubhub said it was spending $30 million to support more than 100,000 independent restaurants. As part of the deal, each restaurant will receive $250 from Grubhub to give $10 off any order of $30 or more. The third-party delivery provider expects the investment to reap a return of $100 million in sales. The deal lasts through the end of April.
“We are doing our best to keep restaurants operational during this crisis and to engage local delivery drivers, but your city’s actions are not helpful,” the message said.
DoorDash announced that it will cut commission fees by 50 percent for independent restaurants that have five or fewer locations. The reduction will run through the end of May. The company claimed that the move will assist more than 150,000 brands in the U.S., Canada, and Australia.
NYC Hospitality Alliance Executive Director Andrew Rigie said fees should be capped even lower at 10 percent.
“After charging high rates to restaurants that were forced to close or offer takeout or deliver only, it’s encouraging to see DoorDash modify their fees for some businesses, albeit a few weeks late into this crisis,” Rigie said in a statement. “But as long as some delivery platforms like Grubhub are still preying on the economic desperation of restaurants and eateries in New York City for their own benefit, government urgently needs to intervene and cap third-party delivery fees at 10 percent.”
The Golden Gate Restaurant Association estimated that 30 percent to 50 percent of San Francisco’s restaurants are still operating. The California Employment Development Department and U.S. Department of Labor show that a significant portion of the state’s 2.3 million unemployment claims since March are in the service industry.