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Home​NewsCouncil Limits Delivery Platform Charges to Restaurants

Council Limits Delivery Platform Charges to Restaurants

A provision in Emergency COVID legislations passed by DC Council on May 5 limits restaurant costs for third-party ordering platforms to 15 percent.

Third-party delivery platforms, such as Doordash or Grubhub can now only charge restaurants up to 15 percent of purchase price to use their services. Similar ordinances have been adopted by San Francisco, Los Angeles and is being considered in New York.

Services such as UberEats, Doordash, Caviar and Postmates offer pick-up and delivery from restaurants that might otherwise be unable to provide it in-house, making business possible through the COVID-19 shutdown. They also charge a commission, separately negotiated for each restaurant, that can be anywhere from 15 to 30 percent and as high as 40 percent on each order.

Restaurants already operate on a low profit margin, usually around 6 percent, and so those commissions can eat up the profits in an industry already operating on tight margins. “Restaurants are trying to eke out some income, and are finding that where third-party delivery is involved, that all of the restaurant’s profit is being eaten up by the commission,” DC Council Chairman Phil Mendelson said at a Monday news conference prior to the meeting.

Platforms are also now required to indicate to the customer how much they are charging the restaurant. Failure to comply can result in a fine of between $250 and $1000 per violation. The Mayor has until May 22 to sign the bill into law.

The bill is the third piece of legislation dealing with fallout from the Coronavirus outbreak. Previous bills were passed March 17 and April 7. The bill also contains provisions for rental repayment plans and reporting of COVID-19 cases from long-term care facilities and DC Jail.

You can see the circulated version of the legislation on Chairman Mendelson’s website.

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