LA Restaurants Say Delivery Apps Didn’t Immediately Implement Fee Caps Despite Citywide Ordinance

One month after the Los Angeles City Council established a delivery fee cap for third-party services like Uber Eats, DoorDash, GrubHub, and Postmates, two LA restaurants allege some delivery apps are not following the new law. Since the ordinance went into effect on June 8, restaurants found that some delivery apps are in violation by still charging the standard 30 percent delivery fee. In most cases, they still haven’t received reimbursement for the fee cap difference, amounting to hundreds of dollars due back to the restaurants.

On May 20, the council passed a 90 day ordinance to cap delivery fees for restaurants at 15 percent, while also limiting non-delivery fees, such as arranging pickup and takeout order, at five percent of the total sale. Effectively this limited fees charged by the companies to 20 percent of the entire sale. The lowered fees were supposed to provide some financial relief for restaurants whose sales have been severely impacted due to the ongoing COVID-19 pandemic. San Francisco passed a similar delivery fee cap on April 10.

Restaurant operators at Highly Likely and L’Antica Pizzeria da Michele found delivery app services largely unresponsive about the citywide new ordinance. After reaching out to delivery apps for clarification and correction, the operators say they received generic statements from the companies, confusing messages, or no response at all.

Highly Likely chef Kat Turner primarily uses Grubhub and Postmates. She contacted Postmates to inquire about the higher-than-expected fees on June 26 and found that all her fees hadn’t changed from 27 to 20 percent until this week. “They told me they’re looking at it internally and they’d get back to me. It was a very innocuous message. Whereas, GrubHub sent an email saying ‘we’re correcting our delivery fees.’” Days later, Turner received a notice from Postmates offering free promotional napkins, but not addressing the higher fee.

On June 30, Turner received a generic email after inquiring about the rate change, which said Postmates was, “working with LA municipality to understand the policy and details.” Though her delivery fee rate is now at 20 percent, she still has not been reimbursed by Postmates for sales starting from June 8.

Screenshot, courtesy of Kat Turner

Hollywood restaurant L’Antica Pizzeria da Michele uses Postmates, UberEats, DoorDash, and Grubhub. Manager Matteo Aondio says he’s only received a series of vague or confusing emails from each company, except GrubHub, which provided a clear notice on the new fee structure. Eater LA reviewed emails between delivery apps and Aondio over the last four weeks.

Aondio is frustrated at the lack of response from companies that should have implemented the new fee structure on June 8. “They are making a lot of money, but it’s hard to talk to a person, and their emails are returned in two or three days,” says Aondio. “Early on, [each company] didn’t know what I was talking about. I wasn’t sure if they were telling the truth. I tried to explain the situation, but [Uber Eats] kept saying ‘we’re going to send your request to our negotiation team and figure it out.’ I told them there was no request or negotiation. The law was already in place for a week.”

Postmates responded to Aondio’s fee cap inquiry on June 24 saying, “We are waiting to hear back from our legal team on how we will proceed. Once the fee cap is applied you will receive a refund for the commission difference.”

In a series of emails, an Uber Eats employee referred Aondio’s questions to the company’s tax or legal team, and did not address the capped fees. An Uber Eats response from June 16 said, “Our legal team is still looking into the new laws that have been applied to your city. Once approved, your marketplace fee will be adjusted.”

Wonho Frank Lee

As of July 9, L’Antica’s app delivery fees for Uber Eats, Postmates, and Grubhub are at 20 percent, though Antica’s DoorDash fees are still at 25 percent. DoorDash told Aondio by phone that their case is now a “closed negotiation,” and they will call him back to fix it. L’Antica has not been reimbursed for the difference. The language of the motion makes it, “unlawful for a third-party food delivery service to charge a restaurant ... more than 15 percent of the purchase price of such online order during the local public health emergency related to COVID-19.”

LA city council’s delivery fee cap ordinance has been troublesome on multiple levels. Numerous restaurants complained about the confusing wording. One restaurant owner, who wished to remain anonymous, claimed the 15 percent cap was front and center on the ordinance, and sold as such. Antica’s Aondio expressed similar concerns and spent hours speaking to customer service reps incorrectly inquiring why the fee was over 15 percent. As stated above, delivery apps are allowed to charge between 15 to 20 percent.

Eater reached out to Grubhub, as well as city councilmen O’Farrell and Price, but have not heard back. Eater spoke with an Uber Eats spokesperson, who said the company already capped fees in Los Angeles. Meanwhile, Turner and Aondio are curious to know when their restaurants will be reimbursed for the fee difference.

UPDATE: About Aondio’s case, he simply wants DoorDash to reduce its fee from 25 percent to 20 percent. After this story was published, a DoorDash customer service representative reached out to Aondio, and said DoorDash’s client settings page contains a glitch. The main summary page shows that Antica is still at 25 percent, but the representative suggested Aondio click through each order, which showed that the rate is now 15 percent.

DoorDash provided the following statement:

“We’ve worked diligently to comply with Los Angeles’ price controls, and as such have reduced commissions for thousands of eligible merchant partners. We can confirm this restaurant has been receiving a commission rate that complies with the City’s mandate. We are actively working to make the communication around our current commission structure clearer for our merchant partners and regret any confusion that may have been caused in this instance.”

Postmates provided the following statement:

“As Postmates continues to fuel tens of thousands of LA businesses, bring needed meals and critical supplies to customers, and enable hundreds of thousands of Angelenos to earn at this critical time — we have been actively working to ensure compliance with the recent LA emergency order by instituting the new rates, we’re in the final phases of the needed product development which will be complete by July 6th, we will be rebating all merchants from the effective date of the order up to present.”

Earlier this week, Uber acquired delivery competitor Postmates for $2.65 billion. Postmates will continue to operate under its own name but will be combined with Uber Eats. Doordash is the current leader in the delivery app space with a 45 percent market share. When the two merge next year, Postmates and Uber Eats will have a 37 percent share in the U.S.

UPDATE: Postmates provided a statement last week to Eater LA, and was added to this story. After this story was published, DoorDash provided a statement. Antica Pizzeria da Michele was contacted by DoorDash customer service after publication, citing a clerical error.

• LA City Council Votes to Cap App Delivery Fees For Restaurants at 15 Percent [ELA]