- San Francisco is limiting how much food delivery companies can charge local restaurants during the COVID-19 public health emergency.
- Third-party delivery platforms such as UberEats and DoorDash can temporarily charge no more than 15% commission.
- The effort is to help local businesses stay afloat as the coronavirus and government orders for nonessential businesses to close keep people indoors.
- San Francisco’s bar and restaurant industries have been slammed since the city’s shelter-in-place order went into effect on March 17.
- Visit Business Insider’s homepage for more stories.
San Francisco is limiting how much third-party delivery platforms can charge local restaurants during the COVID-19 pandemic.
The office of Mayor London Breed announced Friday that third-party delivery companies, which includes the likes of DoorDash, UberEats, and Grubhub, can charge restaurants no more than 15% commission. The temporary cap will be enforced throughout the state of emergency issued on February 25, or until restaurants can resume serving dine-in customers.
The effort is to help support local businesses as the pandemic and government orders to close nonessential businesses keep would-be patrons inside their homes.
“Restaurants across San Francisco are struggling to stay open. In these tough financial circumstances, every dollar counts and can make the difference between a restaurant staying open, or shuttering. It can make the difference between staying afloat or needing to lay-off staff,” Breed said in the press release.
Third-party delivery platforms usually charge restaurants anywhere between 20 to 30% per order for commission. As the world has almost entirely shutdown amid the coronavirus pandemic, delivery companies have heralded themselves as the saving grace for restaurants struggling to adapt as deliveries become their primary form of business. The low-contact nature of food delivery has also become more viable as health officials stress the importance of social distancing to curb the spread of the virus.
But the high commission fees have made it difficult for small businesses to turn a profit and maintain healthy margins, and that’s been an issue long before the pandemic took hold.
Local business owners, such as San Francisco restaurant owner Simileoluwa Adebajo, have spoken out about how they believe these platforms are contributing to their plight amid plummeting business.
“The small businesses like mine over there in the corner, they’re not thinking about how the fees impact my kind of business,” Adebajo told the San Francisco Chronicle. “They don’t care about us.”
Some companies have made adjustments during the public health emergency. Grubhub, for example, has deferred commission fees from “qualified independent restaurants,” but has not waived or reduced them as The Guardian notes.
San Francisco-based Postmates announced on March 13 that it was also temporarily waiving commission fees for businesses in the San Francisco Bay Area, Los Angeles, Sacramento, and Detroit. But that policy affects new partners, not companies already on the app. UberEats similarly has waived activation fees for new partners, as has Doordash and its subsidiary, Caviar.
On Thursday, Doordash announced it was cutting commissions in half for its 150,000 local restaurant partners across the US, Canada, and Australia.
The cap introduced by the city of San Francisco would supersede the third-party delivery platforms commission policies for its San Francisco restaurant partners for the duration of the local emergency.
According to Mayor Breed’s press release, the Golden Gate Restaurant Association estimates that 30% to 50% of the city’s 4,000 restaurants are still operating and offering food delivery.
San Francisco’s restaurant and bar scenes are being slammed by the stay-at-home order, with layoffs ensuing and sales plummeting. Mayor Breed has introduced a number of ways to keep small businesses from going under, like ushering in a moratorium on commercial evictions, but business owners in the city don’t think that will be enough.
San Francisco bar owner Ben Bleimans told Eater SF that he believes about 50 per cent of bars and restaurants are facing “existential destruction.”
“We all want to have the lights on and people employed and be open for the day of the victory parade,” Oakland business owner Matt Reagan told The Guardian. “But I think there’s going to be a lot fewer restaurants when that day comes – a lot of neighbourhood staples that aren’t going to be able to make it through to the end.”