On Tuesday, the Contra Costa County Board of Supervisors approved a cap on food delivery fees in Contra Costa County. This will impact what DoorDash, Uber Eats, Grubhub and others can now charge within the county.
According to the Ordinance:
- A delivery firm shall not impose upon a restaurant any fee, or combination of fees, that is more than 15 percent of the purchase price for the order and delivery of an online order
- A delivery firm shall not impose on a restaurant any fee, or combination of fees, for non-delivery services, including listing services, that, in total, constitute more than 10 percent of the purchase price for order and delivery of an online order. For purposes of this section 3(a)(2), non-delivery services do not include promotional
- Nothing in section 4(a)(1) or 4(a)(2) prohibits a delivery firm from selling promotional services to a restaurant at prices negotiated between the restaurant and the delivery firm. A delivery firm shall not make the provision of services in section 4(a)(1) or 4(a)(2) contingent upon the restaurant’s purchase of promotional
- A delivery firm shall not, directly or indirectly, influence, limit, impede, or impair a restaurant’s determination or calculation of any purchase price of food or beverage that it sells
This ordinance became effective immediately upon passage by a vote of the Board of Supervisors. Unless earlier repealed or modified, the ordinance would be in effect until indoor dining returns at 100% or the health order/local emergency is terminated.
Supervisor Diane Burgis stated she met with DoorDash who made three requests which included that they allow delivery firms to charge 20%, asked instead of terminated the ordinance at 100% dining that it be at 50% dining, and it protect local restaurants and not chains.
Staff said they made with the Public Managers Association, city managers, there was broad support for a county support to regulate this industry –Lafayette, Walnut Creek and Danville have own ordinances and a local ordinance will supersede the county ordinance.
After some debate, the Board opted to keep the ordinance as proposed—however there was discussion of dropping it to 50% indoor dining or a different date such as 90-days (June 1, 2021).
Supervisor Candance Andersen, however, had concerns of Government getting involved with contractual relationships, such as this which was complex, highlighted how the ordinance goal was to protect restaurants and not the consumer.
“This doesn’t have a lot to do with delivery fees, services fees that are passed onto the consumer. We are not in anyway trying to regulate that. Bottom line, we are really trying to protect the restaurant as opposed to the consumer,” stated Andersen.
Staff agreed with Andersen’s statement that the ordinance would protect the restaurants, not the consumer.
Andersen said they would prefer a “date certain” based on the State keep saying things are open then they are not—she also was in favor of 50% and 30-days after in an effort to bring it back for an extension if needed.
She continued, by explaining since they are not protecting the consumer, restaurants will pass the fees onto the consumer or raise the prices higher than the typical menu price because this is a business transaction—drivers need to get paid, business running the drivers need to get paid as well as the restaurant.
“I am afraid in the end, for the consumer, you are not going to see a big difference,” stated Andersen.
Supervisor John Gioia said he preferred to keeping the ordinance to all restaurants to protect all businesses and they would not be able to distinguish between a franchise and a small business—enforcement would be an issue. He suggested they select a date certain for the end of this ordinance or keep it at 100% capacity allowed.
He continued by explaining even when indoor dining hits 50%, a lot of people would still not be going into restaurants to eat.
Supervisor Federal Glover was looking to approve this ordinance with a “date certain” because it made more sense from a consistency standpoint.
Burgis suggested the Board could opt to keep it consistent with the state moratorium on evictions and go with a June date for expiration.
Andersen again stated her concerns about getting involved with a business relationship that is a contractual arrangement—which she called complex. She further highlighted when she orders food, she picks it up and they put it in her trunk and they don’t charge a fee and she doesn’t get charged a fee and it works out well.
Burgis highlighted that small businesses and city managers were in favor of this.
During public comments, Walnut Creek Mayor Kevin Wilk who highlighted how they passed an ordinance out of need in October.
“We normally would not get involved with the free market economy, we felt it was important in this instance to help save some restaurants from closing,” stated Wilk. “Due to state and county mandates we know restaurants have been forced to close their businesses for dining in and even for dining outside for many of the past few months and to survive they have had to depend on take out and delivery only.”
He highlighted because of the Government intervention, it gave third-party delivery services like DoorDash a boost and the services have done quite well and even increased their fees.
“Restaurants typically have a high overhead and delivery has become an essential component for them to stay in business,” stated Wilk.
Chad Horrell, a representative of DoorDash, requested amendments to the ordinance for price control and prevent unintended consequences from this policy. First, requested the Board of Supervisors to lift the cap to 20 percent, which he says 15 percent does not allow them to cover the cost of service. Next, he urged them to lift the ordinance with an end date once restaurants are allowed up to 50% or 75% capacity, not the 100% as written. Or suggested an end date such as 90-days. Finally, he asked the Board to exclude chain restaurants of 10 locations or more in the state.
During Board Discussion, Andersen requested they tie the ordinance to dining capacity or bring it back in 90-days.
Gioia argued that 90-days would be too short and suggested they keep it as written at 100% capacity or when public health orders are terminated, noting they could always bring it back. He further highlighted that Walnut Creeks ordinance is more restrictive while challenging DoorDash saying they are doing a “pretty robust business in Walnut Creek” and have not pulled out of the Walnut Creek market or any market that has this type of cap.
Glover made the motion to accept the ordinance as is which was seconded by Gioia. The Board then approved the ordinance in a 5-0 vote.
In Contra Costa County, Walnut Creek, Lafayette and Danville who already have similar caps, will take precedence over the Contra Costa County cap approved Tuesday. Back in January, Assemblywoman Lorena Gonzalez introduced AB 286 which would create a statewide cap of 15% on Delivery App companies.