What you need to know about the proposed changes to the San Francisco shipping rate cap

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San Francisco officials are one step closer to finalizing a new law that’s being touted as an amicable settlement between third-party delivery apps and the city, which have been embroiled in a legal battle since last July for the fees paid by restaurant owners in exchange for delivery. services. The Board of Supervisors voted unanimously Tuesday, July 19, to create exemptions to the existing 15 percent cap on third-party delivery fees; it is a first obstacle by passing amendments to the law that would also clear a path for delivery giants Grubhub and DoorDash to drop their lawsuit against the city.

The new amendments they’re being proposed as a win-win, a way to preserve the city’s first 15 percent cap in the nation while allowing delivery companies to charge more if their customers want to pay. Under the proposed law, restaurateurs will receive a “basic delivery service,” meaning a listing on apps and delivery of their food, for a 15 percent fee.

However, restaurant owners could also choose a different route: paying a higher percentage of online orders to delivery apps in exchange for more services such as advertising, search engine optimization, business consulting or credit card processing , which is essentially the same rate model. companies use in cities without quota limit. If the new amendments are approved, delivery companies will have to inform restaurants of their fee options by December 1, 2022, and must clearly define fees and charges for restaurant owners.

In an interesting twist, Supervisor Aaron Peskin, who worked to codify the limit in July 2021, says Uber, which is not involved in the lawsuit against the city, approached his office with suggestions about changes to the current law Peskin then pitched the company to Laurie Thomas, executive director of the Golden Gate Restaurant Association, and told Uber that if the terms were acceptable to the restaurant lobby organization, he would be happy to move forward. a proposal Representatives for Thomas and Uber worked out the details, and according to Peskin, Uber “basically changed that deal” with Grubhub and DoorDash to drop the lawsuit if it could get the new legislation passed. After the companies filed legal paperwork in early July confirming they would follow through after the amendments passed, Peskin presented the updated legislation to the Board of Supervisors.

Chef Bruce Hill, a former GGRA board member, uses third-party delivery apps at his downtown San Francisco restaurant ZeroZero and estimates that delivery makes up about 20 percent of his business. He credits third-party delivery for helping carry his business through the pandemic, but remains somewhat cynical about the proposed deal. Hill says he plans to stick with the 15 percent fee, though he says restaurants that rely more on delivery may find the option to pay more for additional services attractive. “It really depends on what your goals are,” says Hill, adding that because of the lack of transparency about how delivery apps work, it would be difficult for business owners to know if they’re getting what they pay for with a fee taller. . “You have no idea internally who’s being prioritized and what favor they’re getting you out of this deal. I think it would be literally impossible to track everything and see if you’re actually getting the promotion they’re promising.”

During negotiations on the proposed changes, Thomas says his goals were to ensure the 15 percent option remained intact through legislation, while simplifying contracts for business owners and providing a path for more cities to follow in San Francisco’s footsteps to work with delivery companies. . Thomas, who owns two restaurants in San Francisco, says his two businesses were paying 25 percent commissions to third-party delivery apps before Mayor London Breed enacted the pandemic-era order fees to 15 percent. Fees at other restaurants were as high as 30 percent, Thomas says.

But determining whether or not compromise is the best route forward depends on who you ask and whether they believe the city could have won the lawsuit against GrubHub and Doordash. Since the companies (along with Uber Eats) filed a lawsuit against it New York in 2021 on its quota cap, Thomas said she was concerned about the potential repercussions if San Francisco had lost. “I don’t see this as caving in any way, I see it as a guarantee that we wouldn’t sink,” says Thomas. “If DoorDash and Grubhub had won the lawsuit, it would have gone back to 25 percent and set the tone for the entire U.S.”

“If we care about our little mom-and-pop restaurants, and we want to live the culture of convenience, we also have to do some research on how much we’re willing to pay for that as consumers.”

Peskin, on the other hand, had faith that the city could have won, not that it would have been easy. “Ultimately, I think we would have prevailed and they would have appealed, and it would have been a stupid waste of money because we were going to do what we were going to do anyway,” Peskin says. “[The lawsuit] it was annoying, but I didn’t care; I just thought they were a bunch of idiots.”

Both Grubhub and DoorDash support the proposed changes and issued statements supporting the updated legislation. (You can read the companies’ respective opinions on lids via their websites, here i hereif you choose.) DoorDash also introduced a list of services by level for restaurants this year, paid 15, 25 and 30 percent of an online sale, depending on the package.

Thomas argues that companies are motivated to reach a fair deal while also finding profit opportunities. “It has to work for everybody so that this is a going concern for them,” he says. “They have to make money from additional services, so they need the option to sell those additional services. We just don’t want to be in a situation where it’s basically a monopoly and it’s 25 percent, 30 percent, or do not offer delivery.”

But Peskin wants to remind San Franciscans to think hard about delivery services, noting that using these apps is an option. “These third-party food apps are more interested in running out of restaurants than they are in passing those costs on to the consumer,” says Peskin. “If we care about our little mom-and-pop restaurants and want to live the culture of convenience, we also have to do some soul-searching about how much we’re willing to pay for that as consumers.”

The proposed law will go through a second reading and vote before moving the ordinance to the mayor for approval. The new law, if passed, will go into effect on January 31, 2023.