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Seattle approves permanent 15% fee cap on food delivery companies, with key compromise – GeekWire

(Uber Picture)

The Seattle Metropolis Council voted Tuesday to completely implement a 15% cap on the charges that companies comparable to Uber Eats, DoorDash, Grubhub, and others cost eating places for meals supply.

The cap has been in place since April 2020, when it was applied as a part of an emergency order on the onset of the pandemic. It was meant to mitigate the monetary hardship that small companies confronted below shutdown orders, as supply orders elevated.

With out the limitation, some supply firms reportedly charged eating places charges as excessive as 30% previous to the pandemic.

The brand new laws, sponsored by Councilmembers Dan Strauss and Alex Pedersen, has a provision permitting supply companies to cost extra if eating places buy extra, non-delivery companies, comparable to advertising and consulting.

San Francisco approved a similar exception last month, amending its legislation to allow greater charges in such conditions. San Francisco had confronted a lawsuit from Grubhub after making its 15% price cap everlasting in June 2021. Grubhub and different firms also sued New York City after it handed a everlasting supply price cap final yr.

“We all know that capping meals supply charges throughout the pandemic benefited each our smallest companies and customers,” Strauss stated previous to the vote, including that it “stays a superb basis for long-term restoration.”

The Seattle Metropolis Council handed the laws 7-Zero, with councilmembers Teresa Mosqueda and Lisa Herbold absent.

Supply companies contacted by GeekWire have been typically accepting of Seattle’s new legislation, with the opt-out provision, even when they weren’t blissful concerning the legislative course of.

Uber for instance, stated in a press release that the corporate “hoped for a extra collaborative strategy from the Metropolis Council.” Nevertheless, the assertion added, Uber helps “everlasting supply price language that enables eating places to have the flexibleness in deciding on the companies that greatest swimsuit their enterprise and units up restaurant house owners for achievement in an more and more aggressive trade whereas paying for the companies they really want.”

Cities “are recognizing that eating places want extra decisions, not fewer, and adjusting their pandemic-era value controls accordingly,” a Grubhub spokesperson stated, including that Seattle’s ordinance will “protect each restaurant’s capability to pick out essential companies to assist develop their companies, together with advertising, promoting, consulting, and supply.”

Based on an evaluation by Seattle Metropolis Council employees, the availability may assist stop meals supply platforms from passing prices on to customers. Meals platforms added surcharges of $1.00 to $2.50 to client payments after a nationwide wave of comparable momentary price caps, in line with the evaluation.  

DoorDash supported the availability however cautioned, “Worth controls can result in elevated prices for patrons, fewer orders for native eating places and fewer incomes alternatives for Dashers. We’re keen to have interaction with policymakers to search out options that higher help eating places, clients, and Dashers.”

Eating places typically have slender revenue margins of 10% or decrease and more and more depend on meals supply to remain in enterprise, in line with a council presentation. In addition they have restricted bargaining energy to barter decrease charges.

Washington Gov. Jay Inslee applied an analogous statewide cap throughout the pandemic that lifted in June 2021. Everlasting 15% meals supply price caps are in place in Minneapolis and Philadelphia.

In Might, the Seattle council additionally handed laws setting minimal wage and different protections for gig employees who fulfill orders for on-demand service suppliers.

When the pandemic started, many eating places embraced the supply firms as a approach to promote meals whereas their eating places remained empty however issues starting from charges to uneven service quickly grew to become a problem. For instance, some eating places complained that the supply firms scraped menus and posted them on their very own apps with out first asking managers or house owners.

In response, the Seattle Metropolis Council final yr positioned new limits that might require supply companies to have agreements with eating places earlier than permitting their customers to order meals for takeout.