clock menu more-arrow no yes

Filed under:

The Boston City Council Will Consider Temporary Caps on Delivery Commission Fees for Apps

Fees from services like Grubhub and Uber Eats are robbing restaurants of profit

A stock photograph of a bicycle holding two red Grubhub food delivery insulated bags rblfmr/Shutterstock

Last week, Boston City Councilors Michael Flaherty and Ed Flynn proposed an order for a hearing to discuss the economic impact of commission fees imposed on restaurants by third-party delivery apps like Grubhub, Uber Eats, DoorDash, and Caviar. The hearing order — filed on April 29 — suggests that the city council discuss the possibility of placing caps on commission fees, which can run as high as 30 percent of a given order’s total price. Flynn told Eater via email that a date has not yet been set for a hearing.

Other cities have passed emergency orders to cap delivery app commission fees at 15 percent, notably Seattle and San Francisco (though the delivery apps, which are mostly based in San Francisco, were very much not into the idea). New York City and Baltimore are considering similar measures.

Bars and restaurants that remain open in Boston during the COVID-19 pandemic have been restricted to takeout and delivery services, making them more beholden to the terms and conditions set by a small group of tech companies than they would be under normal circumstances. When takeout and delivery accounts for fewer than 10 percent of a restaurant’s business, exorbitant commission fees can be stomached. Still not great, but not a serious threat to the overall health of the business either. When takeout and delivery accounts for 100 percent of a restaurant’s business, exorbitant commission fees become an existential crisis.

“During these uncertain times, our local City of Boston restaurants are heavily dependent on revenue from deliveries due to the public health crisis,” said Flynn. “Business owners throughout District 2 have contacted me regarding the negative impact of these fees, with many paying 25 to 30 percent. It’s critical that we explore all options to help our restaurants and small businesses get through to the other side of the COVID-19 pandemic.”

Several delivery apps — including Grubhub, DoorDash, and Uber Eats — have instituted some kind of relief program or another for restaurants that are struggling during the pandemic, but none goes far enough. Grubhub announced in March that it would defer the collection of commission fees but fell short of reducing or canceling fees entirely. The company rightly faced backlash for the move, which was perceived as a cynical PR play.

For its part, DoorDash announced that it and its subsidiary, Caviar, would cancel all commission fees through the end of May. The gesture might be meaningful if the pandemic were expected to relent by then, but it is not.

For now, restaurants that remain open for takeout and delivery must choose between drowning in the deep end of the pool or drowning in the shallow end. And diners must reckon with the fact that supporting local restaurants also means enriching already very rich tech companies. The city council has the power to change that narrative.

As Restaurants Rely on Takeout Orders, Boston Officials Look at Limiting Commission Rates Delivery Companies Charge [BOS]
Seattle Issues Emergency Order to Cap Delivery App Fees for Restaurants at 15 Percent [ESEA]
San Francisco Emergency Order Says Delivery Apps Must Cap Restaurant Fees at 15 Percent [ESF]
Delivery Apps Refuse to Temporarily Decrease the Fees They Charge Restaurants [ESF]
City Council Proposes a Stricter Fee Cap for Third-Party Delivery Services Like Grubhub [ENY]
The Fine Print of Grubhub’s $100 Million Relief Program for Ailing Restaurants [E]
DoorDash Reduces Restaurant Commission Fees by 50 Percent [FOX]

Sign up for the newsletter Sign up for the Eater Boston newsletter

Sign up for our newsletter.