While many cities around the country have created temporary delivery fee caps for third-party food delivery apps during the coronavirus pandemic, San Francisco is going a step further and it’s angered two food-delivery app giants.
DoorDash and Grubhub are going after San Francisco after the city made its delivery fee cap permanent. Citing the move as “unconstitutional,” the food-delivery apps are fighting back against a cap of 15%.
Listen as restaurateur Philip Camino and chef Nyesha Arrington discuss third-part food-delivery apps, the delivery fee cap, and what it all means for those working in the hospitality industry.
Listen to Philip and Nyesha discuss San Francisco’s delivery fee cap:
- In April 2020, many cities enacted temporary delivery fee caps to relieve some pressure from struggling restaurants at the start of the pandemic
- The caps were usually around 15% of the food order and were meant to be a temporary solution until restrictions lifted and restaurants could resume 100% of their normal capacity
- Prior to these caps, fees could range from 20%-40%
- Third-party food delivery apps rely on fees charged to customers and restaurants to cover things like credit card processing, driver pay, and marketing campaigns
- San Francisco’s Board of Supervisors unanimously voted to make the fee cap permanent in June, earning the praise of the Golden Gate Restaurant Association, though San Francisco Mayor London Breed chose to not sign it
- DoorDash says they aren’t able to cover driver pay, operations, credit card fees, and marketing costs while fees are capped at 15%
- To make up the difference, new fees are popping up for consumers
- DoorDash and Grubhub filed a joint complaint against San Francisco to the U.S. District Court, alleging the delivery fee cap to be “unconstitutional” and a “dangerous overreach” of local government power
- Grubhub and DoorDash are suing the city for damages and to put a stop to the delivery fee cap
Links:
Restaurant Business - DoorDash and Grubhub sue San Francisco over delivery fee cap
Restaurant Business - San Francisco to permanently cap third-party delivery fees
Restaurant Business - DoorDash says delivery fee caps are hurting order volumes
Restaurant Business - DoorDash unveils tiered pricing plan for restaurants
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