Following the example of lawmakers in San Francisco and Seattle, the D.C. Council on Tuesday passed legislation that limits commissions third-party delivery services like DoorDash, Caviar, Grubhub, Postmates, and Uber Eats can take from cash-strapped restaurants trying to save their businesses during the novel coronavirus pandemic.
The measure, which caps delivery commissions at 15 percent of food bills during the city’s state of emergency, was part of a relief bill that also called for landlords to accept rent payment plans from tenants and delay foreclosures. As of early Tuesday evening, D.C. Mayor Muriel Bowser had yet to sign the bill into law.
Third-party delivery companies have been known to charge commissions of up to 30 percent, reducing already thin profit margins for professional kitchens. A dine-in ban in place to keep people at home during the COVID-19 outbreak pushes restaurants to rely on the delivery apps more than ever.
“What we are finding is the third-party delivery services are charging commissions that wipe out any profit that the restaurant would receive from that order,” Council Chairman Phil Mendelson said in a Monday news conference.
Four of the delivery companies tried to dissuade Mendelson and his colleagues from passing the bill. Washington City Paper obtained a joint letter that DoorDash, Grubhub, Postmates, and Uber Eats sent to Mendelson to oppose the legislation. It claims that capping commissions would force the companies to raise fees for customers, shrink service areas, and cut “on-demand” job opportunities for workers in need.
“Now is not the time to force drastic, untested policy changes to one of the best current lifelines for fast and accessible work opportunities,” the letter reads.
Asked to comment on potential legislation over the weekend, an Uber spokesperson sent Eater a statement that said the company “supports efforts to help the hospitality industry, which is why we’ve focused the majority of our efforts on driving demand to independent local restaurants,” but said regulating commissions “would force us to alter the way we do business, set a far-reaching precedent in a highly competitive market, and could ultimately hurt those that we’re trying to help the most: customers, small businesses and delivery people.”
Uber says it’s public record that Uber Eats operates on a negative margin. The company already charges a 15 percent commission or restaurants that want to use its platform while paying delivery workers on their own. Uber charges more to supply the platform and the drivers.
Josh Phillips, a partner in Espita Mezcaleria in Shaw, tells WCP the delivery cap “will make a huge difference” in helping the restaurant survive while it’s limited to takeout and delivery.
Before Tuesday, a draft of the emergency relief bill included a section that would aid restaurants in their struggles with insurance companies that have widely denied business interruption claims. That section was removed after a debate over whether forcing insurers to pay out was legal, or if it would actually help in the short term given the protracted legal battles that would likely ensue.
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