Some companies have taken baby steps toward reducing the financial burden on restaurants. DoorDash and Caviar, which are under the same ownership, say they eliminated commission fees on pick-up orders and reduced their delivery commissions. GrubHub created a fee deferral program. Others have made sacrifices here and there, mostly by reducing what diners pay. People in cities across the country, where hospitality industries are crumbling, say that’s not enough.
San Francisco was the first municipality to pass an emergency order temporarily capping delivery app commissions at 15 percent. Seattle also adopted a 15 percent cap. Tomorrow, New York’s City Council will debate instituting a 10 percent cap. Los Angeles and Chicago legislators are also looking into the matter. Most are limiting the scope of the discounted rate to the duration of their city’s public health emergency or whenever restaurants are allowed to reopen to on-premise dining.
D.C. has caught on, according to Council Chairman Phil Mendelson. “It’s only recently come to my attention, but then again this pandemic is fairly new,” he says. “It looks like this is another angle we have to address.”
The chairman says he’s been in contact with the Restaurant Association of Metropolitan Washington about the issue, and the trade association’s CEO, Kathy Hollinger, confirms they’re exploring it. “Restaurants are complaining about this,” Mendelson says. “[These fees] work against restaurants, which was not the idea we had when we limited restaurants to carry-out business.”
The Council is working on another round of emergency legislation tied to the COVID-19 crisis for next Tuesday. “I’m looking to put this in that bill unless there’s something I’m unaware of, like a legal issue,” Mendelson says. He doesn’t expect the Council to choose a fee cap outside of what other cities have instituted or are considering (10 to 15 percent).
Restaurant owners will welcome any help they can get.
Alan Popovsky, co-founder of PRG Hospitality, uses Uber Eats, Caviar, Grubhub, and Postmates. Currently only one of his restaurants is offering take-out and delivery—the Shaw location of Declaration. “We’ve requested to have fees temporarily removed or reduced, however most of the platforms we use have been delaying responses,” he says. “We pay about 20 percent on average to the platforms. I would certainly applaud a cap at 10 percent.”
The move, Popovsky says, would help restaurants remain relevant and sustainable. “It’s going to be a long road ahead and everyone needs to work together from landlords, delivery platforms, utility companies, and purveyors,” he says.
Desmond Reilly, the managing principal of Star Restaurant Group, also wants to see greater equity between delivery services and restaurants. “They help us grow our brand, we help them grow their brand—let us have a more equitable division of the money,” he says.
At one of his restaurants, Chicken + Whiskey on 14th Street NW, they’re seeing more sales week after week, but are still losing money largely because of the fees.
“Even though we’ve had some breaks here and there with promotions that last a week, we can’t afford to operate the business like this,” Reilly continues. “I can only do this for so long because these delivery fees are so expensive. We can raise our prices, but how much will someone be willing to pay for chicken? It’s a concept built for the common man.”
Asked about whether he supports legislation that would institute a cap on commissions, he says he’d be among the first to “praise it, get on board, and be a cheerleader.”
Update, May 2: The Council late last week released the draft language of the bill, which caps delivery fees at 15 percent—the same as San Francisco and Seattle. Armed with specifics, delivery services are now reacting to the proposed legislation.
“We support efforts to help the hospitality industry, which is why we’ve focused the majority of our efforts on driving demand to independent local restaurants, which we know is a key concern of our partners during these unprecedented times,” a spokesperson for Uber Eats tells City Paper. “Regulating the commissions that fund our marketplace—particularly during these unprecedented times—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.”