San Francisco Caps Restaurant Delivery Fees at 15% (1)

San Francisco on Friday ordered third-party delivery services to limits fees charged to restaurants suffering losses since eliminating sit-down service.

The 15% cap announced by Mayor London Breed follows San Francisco Board of Supervisors’ promises to enact legislation mandating a cut in fees, which can be up to 30% of a total bill. The fees are charged to restaurants that use the delivery services to get meals to customers who increasingly are relying on takeout while complying with orders to stay indoors to avoid spreading the coronavirus.

The cap on the delivery charges will remain effective until dine-in service is permitted.

“They want to remain open for all of you, they want to be available for all of you but they are struggling because the delivery costs are making it unsustainable,” Breed said during an afternoon news conference. “There are going to be a lot of restaurants who may not come back” from the emergency shutdown, she said.

City Supervisor Aaron Peskin, who had planned to introduce an ordinance to cap the fees, said, “These corporations have refused to adjust their fees and are profiting immensely off a public health crisis while restaurants and their employees are suffering.”

San Francisco’s shelter-in-place orders, in effect since March 17, made restaurants more reliant on delivery services such as DoorDash and UberEats, to keep their doors open and employees paid.

About 30% to 50% of San Francisco’s 4,000 restaurants are still operating and offering food delivery, according to Golden Gate Restaurant Association estimates.

DoorDash on Thursday also announced it was reducing commission charges by 50% nationwide on its service and another one it owns, Caviar. The DoorDash program will affect more than 1,600 restaurants in San Francisco and 150,000 restaurants throughout the United States, Canada, and Australia through the end of May, the service said in a Friday email.

The 15% limit is part the an emergency order designed to assist small businesses.

GrubHub said the mayor’s action could cause more harm.

“This arbitrary cap is exactly the wrong step at exactly the wrong time: not only could it lower pay for struggling delivery workers, it would disrupt an essential supply chain of meals to San Francisco seniors and families at their most vulnerable time,” GrubHub said in a statement.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

To contact the editors responsible for this story: Tina May at tmay@bloomberglaw.com; Katherine Rizzo at krizzo@bgov.com