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Cincinnati City Council caps third-party delivery app fees on restaurants

Posted at 3:29 PM, May 21, 2020

CINCINNATI — City Council Thursday approved a cap on fees collected by third-party food delivery service apps, such as Uber Eats or DoorDash.

The 6-1 vote by the council sets the limit for delivery app fees to 15% of the amount of food purchased, "in order to protect the viability of restaurants, which are essential to the health and wellbeing of city residents and the city's economy," as the ordinance reads.

City Councilman P.G. Sittenfeld introduced the ordinance earlier this week.

"These are sort of sacred places in our lives, in our community. Add on top of that, they employ thousands of people," Sittenfeld said Thursday. "We need to go to bat for our local restaurants."

It was welcome news to restaurant owners like Kristen Bailey.

Bailey owns Sweets and Meats BBQ in Mount Washington. She said it has been hard enough for her business to stay afloat among the coronavirus pandemic without also having to pay high delivery service fees.

"We're having such a hard time finding meat. We're having such a hard time in the increase in pricing," Bailey told WCPO.

Delivery apps locally surged in use after Ohio, Kentucky and Indiana state officials ordered restaurants closed to dine-in service in March. As WCPO previously reported, it didn't take long for restaurants without their own delivery staff to feel the pinch, as some apps were charging restaurants as much as 30% of every purchase.

"I just can't afford it anymore," Bailey said.

Jose Salazar, owner of Salazar Restaurant and Bar, said 15% was still high but more manageable.

"It makes a big difference for us," he said, noting that his restaurant's end profit margin is between 5-10%. "Thirty percent was just not feasible. Fifteen percent, while it's still a pretty high number, it's one I feel we can work with."

The news was not so welcome to delivery app providers. In a statement to WCPO, a spokesperson for the delivery app Postmates balked at the term "fee," saying it negotiates "commissions" with partner restaurants on an individual basis. The statement reads, in part:

We work closely with our business partners to build a custom agreement that reflects the services they ask us to provide to their business... Commissions are not “fees." [T]hey are the main source of revenue for our company, and they are how we pay for the services that we provide to businesses and our customers. Arbitrarily setting on-demand delivery prices has real consequences that undermine our ability to operate...

The statement also indicated that the commissions collected went toward providing pay and benefits to delivery couriers, marketing, customer service, courier support and insurance.

Councilwoman Betsy Sundermann -- the lone "no" vote on the measure -- questioned the need for the fee cap now that restaurants are beginning to reopen to dine-in service, but Salazar sees it differently.

"Not everyone is ready to go back out and dine in a restaurant. So it is still going to have quite an impact," he said.

Sittenfeld maintained his support of the measure by saying it's not designed to undercut delivery apps.

"If they're serious and they're being honest, if these restaurants go under, guess what: There's not going to be any food to deliver," he said.

Even with the delivery fee cap, though, Bailey maintained the best way to support your favorite local restaurant is to purchase directly.

"There's pros and cons to everything... The best way to support a local business right now is by supporting directly," Bailey said. "Making a purchase in person by building into those people, we need that right now more than ever."

The fee cap took effect immediately upon passage with a 90-day term, but that could be extended in the future.