Los Angeles Likely to Force Delivery Apps to Cap Restaurant Fees at 15 Percent

Los Angeles could be the next California city to cap restaurant fees from delivery apps, if LA Councilmember Mitch O’Farrell has his way. O’Farrell introduced a motion last night to the council that would cap fees for restaurants at 15 percent, mirroring what has already been approved and implemented via emergency order earlier this month in San Francisco. Current delivery fees for restaurants vary by app, but can run as much as 30 percent.

Eater has obtained a copy of the motion, which reads in part:

Countless Los Angeles restaurants are in danger of closing due to the COVID-19 pandemic, and the exorbitant rates charged by third-party food delivery companies provide an additional unnecessary obstacle during this profoundly difficult international emergency. Swift action is required to protect our local businesses and residents from economic catastrophe.

I therefore move that the council request the city attorney to prepare and present an ordinance that will make it unlawful for a third-party food delivery service to charge a restaurant a fee per online order for the use of its services that totals more than 15 percent of the purchase price of such online order during the local public health emergency related to COVID-19 as declared by the mayor.

The motion was presented to the larger council last night, and was seconded by councilmember Paul Krekorian. The city council will vote on the motion next week, which would then send the item to the city attorney’s office to hammer out the details and implementation. It’s important to note that this would only apply to restaurants within the city limits of Los Angeles, and not all of Los Angeles County, including its unincorporated areas and 87 other standalone municipalities.

Moves to cap delivery fees for restaurants are also being considered in Chicago and New York City. The changes come amid a slew of largely bad press against companies like Postmates, DoorDash, Uber Eats, and Caviar, including some restaurants turning off their deliveries altogether as a result of what those owners say are unsafe health practices by drivers.

Many of the apps have also declined publicly to reduce their fees on their own during the current coronavirus pandemic, when restaurants statewide have been forced to offer takeout or delivery only as a way to stay in business. It is likely that, with a cap on delivery fees paid by restaurants, the apps — which largely opposed the cap in San Francisco — may instead pass much of that cost on to diners directly.

• California Restaurants Could Reopen for Dine-In Service in Weeks [ELA]