Local delivery companies are charging significant fees to deliver food from restaurants to consumers at home as governments may soon attempt to step in to help mom and pop restaurants.
The April 19 meeting marked the first time the Los Al city council had met in person since the onset of the pandemic. Rather than meet in the standard city hall meeting room, the city has instead renovated its community center to include a makeshift city meeting room where council members can be socially distanced.
The council discussed an “urgency ordinance” that would sharply limit the fees that delivery service companies could charge local restaurants to deliver prepared dishes to residents.
According to the staff report, third-party food delivery services charges have risen significantly over the past few years. “These increases are impacting local businesses, as restaurant owners and theircustomers are struggling to combat the economic strain caused by the COVID-19 pandemic,” it said.
Third-party food delivery companies, such as Grubhub, Uber Eats, DoorDash, and Postmates have stepped in to fulfill this service by providing residents with delivery from local restaurants, the report said.
“However, these companies charge restaurants commissions that can reach 30% or more, potentially wiping out any profit that a local business might make from a delivery order. With an increasing amount of food delivery business being performed through online third-party services, restaurants must comply with these companies’ fees or risk losing customers,” it concluded.
In fact, Mayor Mark Chirco said other cities in West Orange County, like Buena Park, have already adopted such local ordinances and the state is considering a bill in the Assembly that would limit fees statewide, he said.
Therefore, Chirco said while he has not yet decided to support the ordinance, he thought it was time for the council to at least have a chance to discuss the issue.
“We need to think about it,” said Chirco, saying many consumers have expressed concern over “a lack of transparency” about the fees and commissions among food delivery services.
Mayor Pro-Tem Shelley Hasslebrink said while she liked the idea of the ordinance, it is “just not necessary.”
She said the delivery companies took advantage of an opportunity during the pandemic and simply “took what the market allowed.” Nevertheless, Hasslebrink said the city should do whatever possible to help restaurants in the city.
After Council member Ron Bates suggested the regulation should be facilitated on a business level, fellow Council member Tanya Doby agreed with his idea. She suggested a couple of alternative ideas but said, for now, she kind of has a “small issue” with the ordinance.
Jordan Nefulda said he was reluctant to get involved until he knew more.
Among other provisions, the draft ordinance would restrict fees they could charge. “It shall be unlawful for a third-party delivery service to charge a retail food establishment a delivery fee that totals no more than 15 percent,” was one of the proposed ordinance provisions.
With a similar bill in the state Assembly, however, Chirco said he thought it would be best for the city to table the proposed ordinance to wait and see if the issue is not first addressed by the state. This would give the council more time to explore the issue, he added.
In other action, the council voted unanimously to approve a hike in its master fee schedule. In doing so, Bates suggested the city seriously investigate giving homeowners some relief on fees related to some replacement do-it-youself projects.