Aug 11, 2020 - Technology

New initiative from Big Tech critics: Capping food delivery fees

Illustration of a hundred dollar bill with Benjamin Franklin wearing a chef's hat.

Illustration: Aïda Amer/Axios

A group known for taking on Big Tech is biting into its next target: food delivery apps like Grubhub, UberEats, Postmates and DoorDash.

Driving the news: The Economic Liberties Project, in a new campaign it calls "Protect our Restaurants" launching Tuesday, is encouraging restaurants to lobby for local laws that cap the commissions these apps can collect.

Context: Restaurants that can no longer serve most diners during the pandemic have turned to partnerships with food delivery apps. But in many cases, these apps charge the restaurants roughly 30% of every transaction.

  • Before the coronavirus, apps like DoorDash and UberEats provided eateries with a bonus on top of sales from in-person dining and drinks.
  • Now, when the whole business is takeout and delivery, they're being devastated by the fees, Katy Connors, executive director of the Independent Restaurant Alliance of Oregon, told Axios.
  • "There is value within these companies," she said. "What we need is for them to get on the same page as us."

Details: The Economic Liberties Project is providing restaurants with an organizing guide with tips on contacting local legislators and encouraging them to sign a letter to the Federal Trade Commission urging the agency to investigate GrubHub, DoorDash, UberEats and Postmates.

  • According to the group's tracking, at least 15 major cities in the U.S., and the state of New Jersey, have implemented delivery fee caps of anywhere from 5 to 20%, and dozens more are considering legislation. Many of these caps are set to end whenever the coronavirus emergency does.
  • The group is hopeful that local action will mirror future federal action on food delivery apps.
  • "The overall goal is to make sure that this public utility service, food delivery apps, are run like public utilities," Matt Stoller, director of research at the Economic Liberties Project, told Axios.

The other side: Food delivery apps generally defend their commissions by noting that the fees are their main source of revenue and pointing to the many services they provide their restaurant partners.

  • Those services include "things like paying and providing benefits to delivery couriers, marketing, customer service, courier support, exposure to new customers, and insurance," as Ashley De Smeth, Postmates' head of public affairs, told Axios in statement.
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