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September 18, 2021

Food delivery fees could be capped at 15% under proposed city council legislation

The bill is aimed at helping restaurants recover from the pandemic

Business City Council
Food Delivery Fees Thom Carroll/for PhillyVoice

New legislation in Philadelphia City Council could impose a permanent cap on food delivery fees to help restaurants bounce back from the pandemic.

Food delivery services like Uber Eats, DoorDash and Grubhub could soon have their delivery fees capped under new legislation out of Philadelphia City Council.

Councilmember Cherelle Parker proposed a bill Friday to permanently cap third-party food delivery fees at 15% to support restaurants and businesses recover from the pandemic.

This legislation builds upon a previous bill from Parker that temporarily imposed a 15% cap on delivery fees at the start of the pandemic when delivery rates reached as high as 30% to 40% of the total bill, "taking almost the entirety of [the] restaurant’s margins," Parker said.

After the pandemic halted indoor dining, many restaurants relied on takeout and delivery to stay in business, and many had to front the higher delivery fees for customers and take in a smaller profit, making recovery from the pandemic a challenge.

For instance, DoorDash offers restaurants a three-tier pricing menu: DoorDash Basic, DoorDash Plus and DoorDash Premier, TechCrunch reported.

• Under DoorDash Basic, restaurants pay 15% of the bill, totaling a smaller portion of overall delivery fees, meaning customers pay more for the service. 
• For DoorDash Plus, restaurants pay 25% of the bill, which means lower delivery fees for customers and more visibility on the app. 
• Premier members pay 30% of fees, offering the lowest delivery fees for customers.

This new legislation, if passed, would make the delivery fee cap permanent and allow restaurants to make more of a profit on orders. 

“I am going to continue to stand up to these delivery companies to protect Philadelphia restaurants as they continue to navigate and recover from the pandemic," Parker said.

This news comes just one week after DoorDash, Grubhub and Uber Eats sued New York City after making a similar delivery fee cap permanent, Business Insider reported. The companies said this cap could raise prices for customers and lower rates for delivery drivers.

Restaurants in Philadelphia are still working to recover from the COVID-19 pandemic and are facing worker shortages and supply chain issues.

“Now is certainly not the right time for [restaurants] to be targeted with unnecessary and excessive fees,” Pennsylvania Restaurant & Lodging Association Vice President of Government Affairs Melissa Bova said. “We all know this will be a long road to recovery, and it’s not fair for your businesses to face so much uncertainty [and] unpredictability.”

The bill will be the subject of an upcoming city council hearing, Parker said.

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