Amid the pandemic lockdown, food delivery apps have been raking it in. But seeing San Francisco restaurants laying off workers and struggling to stay even barely afloat, Mayor London Breed — at the urging of the Board of Supervisors — has passed an emergency order that temporarily limits how much these apps can take from restaurants in commissions.
Commissions from delivery apps range from 10 to 30 percent, potentially wiping out any profit that a restaurant might make from a delivery order. And with less than half of San Francisco's restaurants remaining open for takeout and delivery, this means that many of the orders local residents are making in the hope of supporting local businesses are actually lining the coffers of companies like GrubHub and DoorDash.
Mayor Breed's emergency order, announced on Friday, caps delivery app commissions at 15 percent across the board.
Thanking Supervisors Ahsha Safaí and Aaron Peskin for leading the charge, Breed said in a statement, "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."
"We’ve listened to our restaurants and the struggles they’re facing during this unprecedented time," says Supervisor Safaí. "For San Francisco’s rich network of mom and pop restaurants to survive, it’s imperative that we move aggressively. I applaud Mayor Breed for working with us to take swift action."
Some of the delivery companies, in order to encourage more food ordering, having been waiving delivery fees on the customer side. But they've been able to afford to do this by continuing to charge commissions to struggling restaurants — which they charge even when customers place orders through the apps for pickup.
Back in March, Caviar and its parent company, SF-based DoorDash, announced that they were waiving all commission fees through the end of April for independent restaurants newly signing up for their services. For restaurants already using DoorDash and Caviar, commissions are being waived for pickup orders through April. This move came in reaction to the New York City Council proposing a cap of 10 percent for all delivery app commissions.
Rival GrubHub made an announcement as the lockdowns began that it was waiving commission fees paid by restaurants up to $100 million — though the company later clarified, in arguably shady fashion, that the fees weren't so much being waived as they were being deferred, to be still owed at a later date.
Mayor Breed's emergency order will be in effect until shelter-in-place orders are lifted.
Laurie Thomas, Executive Director, Golden Gate Restaurant Association, said in a statement that her group had been pushing for action on this for the past month. "We are very appreciative of the Mayor taking action to limit the amount delivery companies can charge restaurants to 15% for the duration of the emergency order," she said. "This move by the City will help ensure our restaurants who are staying open to deliver much needed food can continue to help keep staff on payroll in addition to giving them a better chance of keeping their doors open."
Let this be a lesson, too, to those ordering from open restaurants in their neighborhoods: If you pick up the old telephone and place orders that way, and you go fetch the food yourself, the restaurant gets to keep all your money.