Struggling San Francisco restaurants got a bit of good news Friday with an executive order from San Francisco Mayor London Breed that caps commission fees charged by food delivery services at 15%.
Since the city’s mandatory shelter-in-place order on March 16, restaurants have not been allowed to host dine-in services. To reach customers they’ve leaned heavily on third-party delivery companies such as GrubHub and UberEats, which have served as a lifeline — but also a source of frustration, as commission fees on every order range from 10-30%. Customers also pay a delivery fee in many cases.
Mayor Breed’s order applies for the duration of the declared local emergency or until restaurants can resume in-person dining. The order will take effect Monday and is enforceable by civil action, a spokesperson for the Mayor’s office said.
The Golden Gate Restaurant Association estimates that of the city’s approximately 4,000 restaurants, about 30-50% are still operating and offering food delivery, some of them getting creative to maximize this capacity.
For Laurie Thomas, executive director of the GGRA, Friday’s order was an answer to pleas she said she made personally with delivery company representatives in recent weeks. Those requests were flatly refused, she told me.
“We have been advocating for this type of relief for the past month and we are appreciative of the progress,” Thomas said in the release. “This move by the city will help ensure our restaurants who are staying open to deliver much needed food can continue to help keep staff on payroll in addition to giving them a better chance of keeping their doors open.”
Thomas told me that she chose to temporarily shutter one of her two restaurants in the city in part because commission fees from delivery services made staying open unfeasible. She added that she was frustrated that delivery companies advertised themselves as saviors for small restaurants while largely keeping the commission fees they paid the same. Instead, many have slashed the delivery fees that customers pay.
Local delivery operators were informed ahead of the Friday announcement that a mandatory cap on fees from the city was imminent.
GrubHub users received a preview of what was to come last night with an email titled: “Do your part to save local restaurants” which said the fee cap would “cripple delivery orders” and could cost users an extra $5-$10 on each one, as reported by Eater. The email further urged users to protest the fee cap and directed them to contact information for the Mayor’s office.
On Thursday DoorDash CEO Tony Xu said on its website that the company would temporarily slash commission fees by 50% globally across its platform and that of subsidiary Caviar, reducing commissions by about $100 million between April 13 and the end of May. The reduced fees would apply to restaurants with five or fewer locations and affect about 1,600 restaurants in San Francisco.
But it also suggested it might fight Breed’s order.
“We are reviewing the Mayor’s order, including the legal basis for such an extraordinary unilateral action, and will respond accordingly,” read a statement DoorDash sent to me on Friday. “At the same time, we will maintain our ongoing commitment to protecting Dashers and ensuring they have strong earning opportunities, especially during this crisis when so many are struggling to make ends meet.”
DoorDash declined to say whether its fees would have been changed by the order.
Mayor Breed credited two members from the Board of Supervisors, Ahsha Safaí and Aaron Peskin representing Districts 11 and 3, respectively, for collaborating on the effort to limit commission fees.