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Help for restaurants overcharged by third-party delivery apps?

Written By Scott Joseph On January 11, 2021

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The state of Massachusetts Wednesday passed an economic development bill that among other things will help that state’s struggling restaurants through stimulus grants and a 15 percent cap on the fees that third-party delivery entities can charge during the pandemic.

Details of the grants, including whether they will have to be paid back, are still grainy. But the issue involving the delivery fee cap should have immediate benefits.

Third-party delivery apps – UberEats, DoorDash, Grubhub and others – typically charge a 30 percent fee of the restaurant’s order, leaving the restaurant with a crumb of profit, if there’s any profit at all.

Greg Granda, co-owner of Shakers American Cafe in College Park, which makes its menu available for delivery through UberEats, explained: “The customer orders off the UberEats app and whatever the order comes to, I will get that total minus the 30 percent. The customer pays the total with tax, plus a delivery fee, service charge and tip, so Uber[Eats] makes out on both ends.”

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Granda says that after he factors in all of his costs, he might keep about 10 percent of the original order’s total.

But Granda says that he and other area restaurateurs are faced with a “better than nothing” situation as diners continue to avoid eating inside restaurants. He estimates that 20 percent of his current business comes from orders via the app (30 percent is through takeout orders that customers pick up).

Granda said that before the pandemic he would use UberEats only during slow times of the day, using the app’s feature that allows restaurants to turn it on or off. He would activate it at 6:30 a.m. for early morning breakfast deliveries and then turn it off at 10:30 when the crowds started to come in to the popular breakfast and lunch destination. Now, “I leave it on all day seven days a week,” he said.

A cap on the delivery fee enacted by Massachusetts and the cities of Chicago, Portland (Oregon), San Francisco, Seattle and New York can give a big boost to restaurants struggling to stay open.

Of course, the delivery apps aren’t too happy about such efforts. They argue that the caps have a counterintuitive result that actually reduces the number of orders a restaurant receives and can increase what customers must pay for delivery.

The apps are also pretty disappointed with making less money on each order. But don’t forget that in November’s election an initiative on California’s ballot that would have given employment protections to the drivers, the people who actually make the deliveries in their own vehicles, was defeated in large part due to a quarter-billion dollar campaign by the third-party apps to quash the bill. So that’s how they’re spending their 30 percent of each order. Or the collective delivery fees. Or the service charges.

As for a cap increasing what the customer pays, so be it. Conveniences have costs. If having food delivered costs too much, get in your car and go pick it up – you’ll save money and you’ll be helping to support the restaurant by not making it pay out an exorbitant fee to the delivery company. And if you’re concerned about social distancing, as you should be, patronize only those restaurants that can assure contactless curbside pickup.

What are the chances that Florida or Orlando will reach out to help the restaurant community with similar legislation? I reached out to several state and city officials and did not receive a response.

So I would guess the answer is that the chances are not good.

We hope you find our reviews and news articles useful and entertaining. It has always been our goal to assist you in making informed decisions when spending your dining dollars. If we’ve helped you in any way, please consider making a contribution to help us continue our journalism. Thank you.

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