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COVID-19 / Delivery / Food and drink / Municipal government / Policies

A Baltimore City Council bill will propose a cap on commission fees charged by food delivery apps

Proposed by Councilman Eric Costello, the legislation calls for a 15% limit on fees charged to restaurants by third party delivery apps. It's designed as relief for local businesses during the pandemic.

An UberEATS delivery. (Courtesy photo)
Updated to include comment from DoorDash. (6:33 p.m., 12/16/20)

The Baltimore City Council will consider a bill to cap the fees charged to restaurants by third party delivery apps at 15%. Leaders said it’s an effort to give relief to local restaurants, as many are struggling in the pandemic and reliant on to-go orders.

Proposed by 11th District Councilmember Eric Costello, the bill is designed as a legislative fix for a concerns that have been raised over how much delivery apps benefit local restaurants, and whether taking commissions that leaders said can be up to 30% is good for businesses — especially in a pandemic where indoor dinging profits have evaporated.

“This cap on fees puts our restaurant community in a better position to be successful at a time when these small business owners really need our support,” Costello said.

In the fine print, the legislation will propose to limit the fees companies can charge on delivery services to 10%, and cap administrative fees at another 5%.

Companies would also prohibited from dropping their wages or compensation as a result of the legislation, or passing on the financial responsibility to consumers by charging higher fees.

The cap on fees would expire 90 days after the governor lifts the state of emergency associated with the pandemic.

The legislation will be introduced at the next City Council meeting on January 11 and Costello said it could be passed, signed and in effect as early as February.

On Friday, restaurants faced additional restrictions as Mayor Brandon Scott put health and safety restrictions in place that prohibited in-person dining a couple days after he was inaugurated as mayor. A group of restaurant owners turned out to oppose restrictions on Monday, and call for relief. Scott said the decision “was not made lightly, but was necessary to keep our community safe in a worsening pandemic.” He voiced support for the new legislation and called on residents to support local businesses.

The bill also has the support of recently-inaugurated Council President Nick Mosby, who said it “puts money directly back in the pockets of Baltimore business owners who provide the jobs that are the lifeblood of this city.”

Third party delivery apps operating in Baltimore include Grubhub, UberEats, (recently-IPO’d) DoorDash and Black and Mobile, a startup which recently launched in the city. Technical.ly has reached out to each company for comment.

For its part, Uber voiced opposition to a cap on the fees.

“We support efforts to help the hospitality industry, which is why we continue to focus the majority of our efforts on driving demand to independent local restaurants, which we know is a key concern of our partners during these times,” the company said in a statement.  “Regulating the commissions that fund our marketplace forces us to radically alter the way we do business and ultimately hurt those that we’re trying to help the most: customers, small businesses and delivery people.”

A DoorDash spokesperson said the company offers different options for commission to the restaurants it works with, including one with zero commission. But as for this proposal, the spokesperson said, “Pricing regulations like these can remove options available to restaurants by limiting their ability to opt-in to additional services to help their business.”

Grubhub typically takes from 3% to 15% in commissions. That price can balloon, as shown in a viral Facebook post, depicting a restaurant getting $376.54 from $1,042.63 of sales. A company spokesperson declined to comment until they could see the actual language in the bill and could make a more informed stance.

In the early days of the pandemic, a similar cap on fees was passed in D.C., Seattle and San Francisco.

Donte Kirby is a 2020-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Robert W. Deutsch Foundation.
Companies: Baltimore City Council / Uber

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