Dive Brief:

• San Francisco's Board of Supervisors unanimously approved a resolution on Tuesday that would permanently cap delivery fees charged to restaurants at 15%.
• While the resolution only includes a cap on delivery fees, amendments under consideration include allowing restaurants and delivery companies to work out marketing fees in a separate contract and a 3% cap on credit card processing fees. Once these amendments are worked out, the bill is expected to be sent to Mayor London Breed for approval.
• The original fee cap, which was passed place as an emergency order by Breed last year, is expected to expire Aug. 15, which is 60 days after restaurants were allowed to fully reopen in the city. Cities across the country, including New York City, Los Angeles, Chicago, Seattle, Washington, D.C., Las Vegas and Portland, Oregon, also passed similar temporary caps during the pandemic.

Dive Insight:

While restaurants have hailed these caps during the pandemic, delivery companies and drivers have been widely against them. DoorDash and Uber Eats added additional customer fees in various municipalities that capped fees. DoorDash said in a blog post in March it took that route to cover the costs associated with delivery. The company also claimed these limits decrease order volumes, which in turn, means its couriers earn less money. 

"Experience with fee caps proves that they are bad for drivers, bad for restaurants and bad for consumers," Geoff Vetter, spokesperson for the Protect App-Based Drivers & Services Coalition, said in an email to Restaurant Dive. This coalition is formerly the Yes on Prop 22 Coalition, which advocated to keep drivers classified as independent contractors in California through Proposition 22, which passed last year.

"In cities with temporary fee caps, customers experienced price increases between $1.50 to $3 per order which led to significantly reduced customer demand hurting the very restaurants they were intended to help," Vetter said. "Our broad coalition of thousands of drivers, app-based platforms, community, and social justice advocates will continue working with the Mayor and Board of Supervisors to educate them about the harm of a permanent fee cap."

Restaurants, on the other hand, have praised these caps. Golden Gate Restaurant Association told the San Francisco Chronicle that the fee cap will help restaurants to maintain financial sustainability during their recovery. Restaurants have long complained about commissions that range from 15% to 30% per order, which cut into revenues. 

Many providers did cut commissions for select independent restaurants and offered commission-free products last year. DoorDash earlier this year created a tiered commission structure to provide more flexibility and allow restaurants to choose the level of marketing support they want. 

While some municipalities are considering permanent caps, including New York, others have been lifting caps. Washington State rescinded fee limitations on Monday in light of its June 30 reopening.