After San Francisco was first to adopt a pandemic-era fee cap for third-party delivery sites like DoorDash and Grubhub, a compromise deal will take effect here January 31 where the apps can go back to charging way more than 15%.
Early in the pandemic lockdown days of 2020, San Francisco was he first U.S. city to adopt a 15% delivery fee cap for third-party restaurant delivery apps like DoorDash, Grubhub, and Uber Eats, as those fees were hitting up to 30% and a taking a huge bite out of struggling restaurants’ bottom lines. More than a year later, San Francisco made that 15% cap permanent, as the idea was catching on in plenty of other cities across the country, very much to the chagrin of the third-party delivery companies and their investors.
But the San Francisco Board of Supervisors graciously came to a compromise deal last July that would allow the apps to start charging restaurants more than the 15% once more. And they graciously arrived at this compromise deal because the apps were suing the city.
🚨 SF restaurants who offer delivery 🚨: be sure to read this about delivery fee caps changing on 1/31! Via @GGRASF: https://t.co/g2oISQYtZw— Marcia Gagliardi (@tablehopper) January 18, 2023
As Tablehopper points out above, that compromise deal takes effect next Tuesday, January 31. And the Golden Gate Restaurant Association (GGRA) has the finer details: “Every restaurant/bar that uses a delivery service in San Francisco must proactively opt into a new contract on/before 1/30/2023 or else their fees will revert to the rates in their pre-pandemic contract (which are likely much higher than the current 15% rate).”
We don’t know what the new fees will be, but you’ll notice the GGRA used the phrase “likely much higher than the current 15% rate.” The Association also notes that “You will likely have to proactively change your contract if you want to take advantage of the 15% fee option. Otherwise, it may revert to a higher fee beginning on January 31, 2023.” So if the app automatically enrolls you in something unless you proactively opt out, well, you can draw your own conclusions about whether this represents a good deal.
ATTN: Food-based businesses! The rules for delivery providers like @UberEats @Grubhub and @DoorDash are changing.— San Francisco Office of Small Business (@SFOSB) January 18, 2023
Review and update your contracts by January 30, otherwise the fees may go up. pic.twitter.com/rRJ8hPgdy9
Restaurants can still keep their delivery 15% fee cap, they just have to update their contract manually to do so. Otherwise, the apps will revert to charging more, but they say this is in exchange for “marketing services.” That probably means some combination of increased visibility for those who pay fees of more than 15% (and, perhaps, throttled visibility for those who choose to stay at 15%).
When the compromise deal was brokered last July, Grubhub said in a statement to SFist that these marketing services were “important services including marketing, advertising, consulting and delivery.”
You the consumer are unlikely to be directly affected by what is surely a looming fee hike coming to SF restaurants. But it could ostensibly lead to higher prices so the restaurants can maintain their already-thin profit margins. But if you find your favorite restaurant a little harder to find on a food delivery app come next Tuesday, January 31, the expiration of the fee cap might have something to do with that.
Related: DoorDash and Grubhub 'Pause' Their Lawsuit Over SF’s 15% Delivery Fee Cap, Offer ‘Opt-In’ Compromise [SFist]
Image: FRANKFURT, GERMANY - AUGUST 20: An Uber Eats delivery person rides a bicycle on August 20, 2021 in Frankfurt, Germany. (Photo by Jeremy Moeller/Getty Images)