With restaurants struggling to stay afloat during mandated dine-in closures during the pandemic, the Long Beach City Council voted Tuesday to cap the fees that third-party services charge them to deliver food.
The new ordinance will cap the fees charged to restaurants at 15% and put other restrictions on delivery services like GrubHub, Uber Eats, DoorDash and Postmates. They’ll now be barred from eating into drivers’ tips to recoup lost revenue due to the cap on fees or charging customers higher prices than listed on a restaurant’s menu.
Limiting fees could help restauranteurs hold onto more of their revenue. Some reported delivery apps charging up to 30% in fees.
“While it might not seem like a lot, this extra percentage could be the difference between it costing us money to serve that meal—meaning actually losing money while working—or making it a sustainable sale,” said Stephanie Lyn Carlough, owner of Plunge LBC.
She asked the council to extend the cap for at least one year after the local health orders are lifted. They currently ban all dine-in service, including outdoor dining.
The Long Beach ordinance, which is set to go into effect immediately once Mayor Robert Garcia signs it, is expected to be reviewed on a revolving 90-day basis. However, other cities like Los Angeles have already extended their delivery fee caps until after restaurants are allowed to operate at 100% capacity.
Delivery app companies have pushed back against the fee cap. A spokesman for GrubHub previously called the idea “well-intentioned but counterproductive,” arguing that it would hurt drivers who rely on the apps to make money.
“The caps lower pay for drivers by reducing the number of orders to be delivered,” GrubHub said in a statement last month, “which severely impacts how many customers and orders we can bring to these restaurants.”
Nevertheless, setting the cap at 15% drew unanimous support from the council as they sought to address an issue created in part by the city and state’s own health orders, which are keeping people at home while simultaneously banning dining-in at restaurants.
“I think this really is urgent right now. As you know our small businesses, our restaurants are suffering greatly during this pandemic,” said Councilwoman Mary Zendejas. “Even though this is a tiny, tiny fix it brings me a little bit of hope for restaurants.”