With Long Beach restaurants still closed for outdoor dining and little certainty when they can resume operations, the City Council is expected to vote Tuesday to cap fees charged to them by third-party delivery services.
The new ordinance would cap the fees charged to restaurants by delivery services like GrubHub, Door Dash and Postmates to no more than 15% of the purchase price of the order as well as prohibiting those companies from garnishing tips from delivery drivers to make up for lost fee revenue.
If approved, the ordinance would put Long Beach on par with other cities like San Francisco, Seattle and Los Angeles, all of which enacted similar measures last year.
The ordinance in LA was approved in May and was extended by the LA City Council in August to run until restaurants are able to operate at 100% capacity without restrictions, according to the Los Angeles Times.
“This is a government-created monopoly and we have to put the economic controls in place to prevent abuse,” said Councilman Rex Richardson, who chairs the city’s economic development and finance committee.
Richardson said that in talks with restaurant owners since the outset of the pandemic, putting a cap on delivery service fees has been targeted as way to help restaurants survive the economic shutdown.
In a hearing in April where restaurant owners were testifying to the impacts that a curtailing of dining would have on their industry, Luis Navarro, who runs Lola’s Mexican Cuisine, Portuguese Bend and The Socialist, said that his locations typically pay between 20-30% in fees for delivery services.
Reigning those in during the pandemic “would help most restaurants in the long term,” Navarro said.
While the conversations around delivery app fees began last April, the council will vote Tuesday just one month after it directed city staff to cap the fees as part of its restaurant retention program.
If approved, the ordinance would go into effect immediately after its second reading, which is scheduled for the council’s Jan. 26 meeting. Violations of the ordinance by delivery companies would result in legal action to recover damages, payment of attorney fees and possible civil action.
The ordinance is expected to return to City Council for review every 90 days with the council having the power to determine the end date of the ordinance based on reports from the city manager.