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Update 3/2: The D.C. Council unanimously approved the emergency legislation this afternoon. The 5 percent fee cap will take effect once the mayor signs it. She has 10 days to do so.
The D.C. Council could further regulate third-party delivery companies should it adopt new emergency legislation capping fees on pick up-orders introduced by Ward 3 Councilmember Mary Cheh. Earlier in the pandemic, the District limited the commission fee companies like DoorDash and Uber Eats can charge for delivery services to 15 percent. Now Cheh is proposing a 5 percent fee cap on pick-up orders placed using the same apps.
Those who violate the new fee cap, which also applies to orders placed through the apps that restaurants deliver themselves, would be subject to the same penalties as those already in place for the 15 percent fee cap on delivery orders. The Department of Consumer and Regulatory Affairs can levy fines between $250 and $1,000. Postmates wasn’t quick to comply to the 15 percent fee cap and DoorDash tried to find a way around it until D.C. Attorney General Karl Racine stepped in.
“Every percentage helps on every single order,” says Sprig and Sprout chef and owner Jennifer Hoang. “Even though pick-up isn’t as popular, if it’s a couple more dollars a day, that’s more money in our pockets.”
Before the pandemic spurred emergency legislation regulating commission fees, Hoang says third-party apps charged roughly 30 percent for delivery orders and between 8 and 15 percent for pick-up orders. Representatives from Grubhub and Uber Eats confirm these percentages to be accurate, though Uber says there was room for restaurants to negotiate their pick-up commissions.
“A 10 percent drop in fees might not sound like much, but it’s huge,” says Pie Shop owner Sandra Basanti. “People are under the impression that pick-up orders don’t come with a fee. This is great, great news. We’ve been getting gouged for so long that any kind of help or reduction that we can get [is welcome].”
Uber Eats reduced their pick-up commission fees of their own volition. “Last year, we instituted a 0 percent commission rate for all pick-up orders and just this month, we announced an extension of that practice through June 30, 2021,” says local spokesperson Michele Blackwell. Hoang was aware of Uber’s voluntary reduction, but Basanti was not.
While DoorDash did not respond to a request for comment on Cheh’s proposed legislation, Grubhub did. “Fee caps are well-intended but counterproductive at a time when restaurants need more support, visibility, and order volume than ever,” a company spokesperson tells City Paper. They argue that reducing commission fees somehow impacts how many orders restaurants receive, reduces pay for drivers, and increases costs for diners. “Ultimately, fee caps do the opposite of what they’re intended to do, costing valuable jobs, tax revenues, and important economic activity.”
Statements like these are hard to swallow for those who watched third-party delivery apps shell out millions for Super Bowl ads featuring Sesame Street, Wayne’s World, and Cardi B cameos. A Grub Street article from earlier this week, “Big Delivery Is Winning — Even If Everyone Hates It,”spells out how company leaders are making big money while others in the delivery economy aren’t. “If the couriers aren’t making money, and restaurant workers aren’t making money, and shareholders aren’t making money, who is? The executives, of course.”
“Delivery apps have effectively built an entire industry connecting customers and restaurants,” Cheh says. “Unfortunately, their market power has allowed them to fleece our struggling restaurants with high fees. This exploitation must end.”
The D.C. Council will discuss the bill on Tuesday. Both local fee caps would expire at the end of the COVID-19 public health emergency, though Cheh has expressed interest in making them permanent. In December, Mayor Muriel Bowser set a public health emergency end date of March 31. This could change.
New York, Philadelphia, and Chicago have instituted similar fee caps for orders that do not involve delivery. Customers can always call a restaurant and ask if they prefer to accept pick-up orders directly or through third-party apps.
In addition to the commission fee caps, the D.C. Council also passed emergency legislation introduced by Ward 5 Councilmember Kenyan McDuffie that makes it unlawful to list a restaurant on a third-party app without permission.