Monterey, Pacific Grove eye possible caps on food delivery fees

Peninsula Premier Admin

MONTEREY — At least two cities along the Monterey Peninsula are looking at ways to cap the amount food delivery companies like Uber Eats and DoorDash charge to restaurants to deliver their food to customers.

Santa Cruz, Santa Clara, San Francisco and Berkeley have all passed ordinances capping the percentage charged to restaurants at 15%. Currently, food delivery companies can charge up to a maximum of 30%.

Take out has been a saving grace for restaurants in Monterey County since closing for indoor dining on March 17. But these high delivery fees are creating another hurdle for the cash-strapped eateries.

Frank Geisler, the chief executive of the Monterey Peninsula Chamber of Commerce, said more research is needed into possible alternatives. Elected officials in Pacific Grove on Wednesday have the opportunity to pass an urgency ordinance capping charges at 15%

And Monterey is hosting a forum at 10 a.m. Wednesday to discuss with the public its next move regarding any potential cap. People interested in attending the free forum must register at https://bit.ly/3ixjNEP.

Monterey Assistant City Manager Nat Rojanasathira said restaurateurs, business operators, delivery drivers and third-party food delivery service providers are encouraged to attend.

“There is the potential of bringing this to the council to see if they want to cap fees, but we wanted to hear from the public first,” Rojanasathira said.

Both cities’ chambers of commerce support temporary caps with provisions to sunset any ordinance in a specific time period or until restaurants can fully reopen. But Geisler said it is not as simple as just passing an ordinance. Both he and Pacific Grove Chamber of Commerce President Moe Ammar said it’s uncharacteristic for chambers to support another layer of government regulation.

“But those people are hurting, and it just seems like common sense to limit the hurt for a limited time,” Geisler said.

The exact number of restaurants that have closed along the Peninsula because of the pandemic is not known, but it seems like everyone knows or has heard about a restaurant closure. Many of these businesses have had to shut down permanently. The losses will be in the millions of dollars, business watchers say.

“The chamber has heard from a number of restaurants that the fees are out of whack, many of which have jumped to 30% since the pandemic began,” Ammar said.

In Pacific Grove the ordinance, if approved Wednesday, will sunset 90 days after the end of the prohibition on indoor dining.

“After nearly eleven months of economic impacts from the COVID-19 pandemic – with a short reprieve allowing indoor dining – restaurants are now subjected to even more restrictive rules of operation that will leave them dependent on food-delivery apps for their survival,” wrote Pacific Grove City Manager Ben Harvey in a report to the city council.

Elected officials there can pass an urgency ordinance that would take effect immediately, or it could pass a non-urgency ordinance in which case it would need to come back to the council again for final approval.

San Mateo-based Second Measure, a business analytics firm, reported that in 2019 DoorDash was responsible for 45 percent of meal delivery sales globally, while Uber Eats and Grubhub battled it out for second place.

None of the companies are profitable yet but their sales are huge. According to BusinessOfApps, a British analytics firm, Uber Eats generated more than $2 billion in sales during the first two quarters of 2020, compared to $1.9 billion for all of 2019, meaning it’s likely the company doubled its revenue during the pandemic.

And DoorDash in documents filed with the Security and Exchange Commission for its initial public stock offering reported revenue of $1.92 billion for the first nine months of 2020, up more than three times from the same period a year earlier.

Contributed by local news sources

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