Everybody Is Blaming Somebody Else for Seattle’s Punishingly High Delivery App Fees

AfterAfter years of complaints over low pay for gig workers and occasional protests from app delivery drivers, the Seattle City Council took action in 2022. Members voted unanimously to pass legislation called PayUp, which among other things was supposed to guarantee a minimum hourly wage to delivery workers, including those who work for apps like DoorDash and UberEats. On January 13, 2024, the ordinance finally went into effect. Chaos ensued.

The law mandates that workers earn 44 cents a minute and 74 cents a mile traveled, or a minimum of $5 per order. App companies say this works out to at least $26.40 an hour (minimum wage in Seattle is $19.97). When this rule came online, DoorDash and Uber immediately added a $5 fee to every order placed through their apps, along with a notice that this fee was now a necessary cost of doing business in Seattle.

When combined with the many other fees and taxes charged by these apps, this made ordering delivery often prohibitively expensive. Matt Parker, who owns the West Seattle teriyaki spot Grillbird, says that a $54 order for pickup placed on his restaurant’s website would be $85 when placed through Uber Eats. A $9 chicken tikka kathi roll at Spice Waala, one of Seattle’s most affordable takeaway joints, is now $19 on DoorDash, before tips. “I would not pay those prices myself,” says Spice Waala co-owner Uttam Mukherjee.

People are not paying those prices, it turns out. On February 13, a month after the ordinance went into effect, Spice Waala said on Instagram that delivery sales were down 30 percent in January compared to the same time last year, which the restaurant blamed on the $5 surcharge. Other Seattle restaurants have seen similar drops as customers cut back on their delivery orders or delete the apps entirely.

Though the law was intended to help delivery drivers, some workers complained that the drop in order volume was actually hurting their pay; the lack of orders prompted Tony Illes to become an independent delivery man under the moniker Tony Delivers.

Some drivers and restaurant owners blame the council for these negative consequences. But those who supported PayUp in the first place say that the apps have hiked up fees unnecessarily high in order to put pressure on politicians to repeal the law. “I knew that the gig companies would retaliate [to the ordinance],” says Carmen Figueroa, a DoorDash driver who volunteers for Working Washington, the primary labor nonprofit that lobbied for PayUp’s passage. “I did not think that they would retaliate to the point where they hurt their customers, the restaurants, the drivers… [It feels like they] are just getting revenge on all of us.”

The City Council — which after last year’s elections is seen as more centrist and business-friendly than the council that passed the ordinance — now seems likely to repeal or tweak the law after hearings that focused on the concerns of the apps and Drive Forward, a group of gig workers with ties to Uber.

Some members of the council are unhappy about how this process is playing out. “The app-based companies trying to repeal the minimum wage […] must release information justifying their fee increases before the Council moves forward. They have refused to do that,” Councilmember Tammy Morales said in a press release. “We should not repeal labor protections every time billion-dollar corporations hike fees on customers without justifying those fee increases. That would allow corporations to extort our political process.”

The apps have essentially said that if PayUp is struck down, the $5 surcharge could go away. “The regulatory response fee in Seattle helps offset the costs associated with this law,” a DoorDash spokesperson told Eater Seattle in a statement responding to questions about PayUp. “If those costs can be decreased, we will explore all options to increase affordability for consumers, including a reduction of the fee.”

That would likely be good news for wallet-conscious customers and restaurants. But the backlash is a demonstration of the apps’ raw political power. Between them, DoorDash and Uber Eats control 90 percent of the U.S. meal delivery industry, which surged after the onset of the COVID-19 pandemic. They have become ubiquitous in Seattle and other cities; meanwhile, their workers (still classified as independent contractors despite some efforts across the U.S. to change that) have to accept what gig worker advocacy groups have described as low pay. And as this PayUp conflict is demonstrating, it may be nearly impossible for a city to fully rein the delivery apps in through similar legislation.

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Restaurants have a close but not necessarily warm relationship with DoorDash and Uber Eats. Bok a Bok Chicken co-owner Brian O’Connor calls them “a necessary evil,” referring to the apps’ practice of charging restaurants a commission on each order — typically between 20 and 30 percent — to list their businesses on the delivery platforms. This is before factoring in the additional costs of advertising on those platforms to stand out from the crowds of restaurants populating the apps. (The commissions are why even before the PayUp ordinance, the same menu item might cost more on the apps than it would at a restaurant, as the restaurants pass on some of this cost to the customer.)

Apps are essential for delivery-centric enterprises like Bok a Bok, which has four locations in the metro area, all walk-up windows with no seating. O’Connor estimates that 65 percent of the business is through third-party apps. An uptick in app fees means that most of his customers are suddenly paying more for his product through no action on his part.“Everyone’s losing money right now.”

O’Connor and his director of operations, Jaclyn Wagner, have been furiously brainstorming ways to keep the order volume up, despite the new fees. Last month, Bok a Bok announced on Instagram that the restaurant would cover the $5 “Seattle response fee” itself, an unusual move that means the restaurant is voluntarily losing an additional $5 on each order. The Bok a Bok team is also encouraging people to order through the restaurant’s website, since DoorDash charges a smaller flat fee for delivery of website orders.

Other restaurants have taken similar approaches to limiting costs, with many businesses emphasizing ordering through their independent websites. Some restaurants, like Grillbird, have seen an uptick in pickup orders as people decide to save money, but rarely enough to make up for the drop in deliveries.

“Everyone’s losing money right now,” says Spice Waala’s Mukherjee, who has raised the prices of some menu items in response to rising costs for the first time since 2021. In conversations with app representatives, Muherjee says they’ve encouraged him to increase his in-app marketing budget to draw in more customers. “The solution has just been, ‘Hey, do you want to spend more on marketing then?’” he says. “Where’s that money coming from?”

Like other restaurant owners Eater Seattle spoke with, Mukherjee is sympathetic to the goals of the PayUp legislation — Spice Waala pays its own employees an average of $26 an hour including tips, he says, plus benefits — but blames the council for not anticipating this outcome. “I’m upset [because I feel like no one considered] that if this ordinance was put in place, the first thing that could happen was that everyone would raise their prices,” he says.

“I think the City Council was trying to do something good,” O’Connor says. “I think they were trying to help but, you know, maybe talk with people beforehand about it.”

Though restaurant owners may be under the impression that this was rushed, it was the product of more than a year’s worth of meetings with stakeholders — including app companies like Uber and DoorDash, PayUp advocates are quick to point out. Hannah Sabio-Howell, a spokesperson for Working Washington, says that the apps were able to insert language into the legislation that lowered the proposed pay rates and weakened restrictions on when apps could “deactivate” (aka fire) workers. The apps also got the City Council to agree to delay implementation of the law until 2024, two-and-a-half years after its passage.“The overall feeling from workers who fought for this policy… is one of betrayal.”

The apps argue that though they were consulted in the legislative process, their concerns were not heard or incorporated. DoorDash and Uber Eats warned that higher fees and lower demand would be a consequence of this ordinance when it passed in 2022, and followed through on that warning.

The City Council is now weighing a partial repeal of the ordinance that would reduce driver compensation to $19.97 per active hour worked, according to the Puget Sound Business Journal. “I believe that we created a problem and it’s our responsibility to fix it,” City Council president Sara Nelson said during a recent meeting; she hopes that the council can start the process of amending this legislation this month.

That reduction in pay might convince the apps to decrease their fees, lessening the pressure on restaurants. But some PayUp supporters are dispirited by how quickly the apps were able to pressure the City Council into backing off an ordinance that was passed after years of hard-fought advocacy. “The overall feeling from workers who fought for this policy… is one of betrayal,” says Sabio-Howell. One of Working Washington’s preferred policy fixes would be to cap delivery app fees, as the city did during the pandemic lockdown era. (The City Council does not seem to be considering this option.)

Figueroa, the DoorDash driver, worries that a full or partial repeal of PayUp will signal to the apps that they can act with impunity and abuse the power they have over restaurants, workers, and the Seattle City Council. “They’re going to know that they can do whatever they want.” she says. “They don’t care about their customers, they don’t care about the restaurants, and they don’t care about the drivers. All they care about is how much money they can squeeze out of every group.”

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