Seattle Issues Order to Cap Delivery App Fees for Restaurants at 15 Percent

Seattle Issues Order to Cap Delivery App Fees for Restaurants at 15 Percent

On Friday afternoon, Seattle Mayor Jenny Durkan, together with City Council President M. Lorena González and City Councilor Lisa Herbold, announced an emergency order to help restaurants during the COVID-19 crisis: Third-party delivery apps can now only be restaurants recharge at a 15 percent fee.

The order also requires that 100 percent of the tips from these apps go to the drivers, and includes provisions that make it clear that it is illegal for a third-party platform to lower driver compensation rates as a result of this promotion. This applies until the dine-in service can be resumed.

“Unfortunately, some third-party delivery services charge excessive commission fees, adding to the financial plight of many restaurants,” Mayor Durkan said in a statement. “This commission cap will be essential to ensure that delivery and take-out remain viable options and do not create increased financial difficulties.”

“This will bring instant relief to restaurants,” said Dan Austin, owner of Peel & Press Italian restaurant in West Seattle and co-chair of the West Seattle Government’s Advocacy Committee. “It’s more money to cover the payroll.”

This order follows an order placed by San Francisco two weeks ago, which also capped delivery charges to 15 percent. Several other cities across the country, such as Los Angeles, Chicago, and New York, are considering similar measures. Currently, apps like Grubhub can charge anywhere from 10 to 30 percent commission on orders, adding an extra financial burden to restaurants that were already taxed for staying at home during the Washington mandate.

Several affected companies have resisted the upper limit. Grubhub, who recently announced a $ 100 million fee deferral but no cancellation, had announced that the move in San Francisco would add up to $ 10 per order to customers. Doordash (who also owns Caviar) points out that it had already cut its commission and marketing fees in half by May due to the crisis, and called in Chicago for a proposed order to unconstitutionally limit fees to 5 percent.

But even before COVID-19 affected the food scene, action was taken against high fees for delivery apps and sketchy practices. In early February, Seattle foodie destination Lark struggled with Seamless when the service listed the restaurant on its app without permission, which several apps have been doing to the frustration of restaurant owners in recent months.

Many of the apps, in normal times, argue that they help bring more business through take-out and restaurant delivery, bonus money after the dine-in service. But if there is no dine-in service at all, restaurateurs and chefs would claim they are just taking money away, period.

“Instead of a symbiotic relationship, it was a parasitic relationship,” says Austin, adding that a recent commercial called “Restaurants Are Our Family,” announcing GrubHub’s affection for customers, sounds hollow to him. “If they really wanted to help, stop spending millions promoting your platform and take the money to the restaurants that you say you are supporting.”