Long Beach restaurant owners may soon see more profit as the Long Beach City Council moved forward with an item that would cap third-party food delivery fees at 15%.
The move comes as restaurants across the city remain closed due to rising COVID-19 case numbers. To offset their losses, many restaurant owners turned to third-party delivery apps.
Ciaran Gough, who owns The 908 in the Fifth District, said that most restaurants operate with a low profit margin. These profits can be nullified by the cost of using third-party food delivery services.
“One would ask, ‘Why use those delivery services?’ Well, the reason why is: you have to, because they have a monopoly on that delivery service,” he said.
Third-party food delivery operators like UberEats, Grubhub, Postmates and DoorDash charge a fee to restaurant owners for using their service.
Grubhub currently charges 10% on delivery commission and a 3.05% processing fee per transaction. If businesses offer their own delivery through the app and just want to use the platform for marketing, Grubhub charges an extra 15%.
UberEats charges restaurants 15% commission if they just use the app, but have their own means of delivery. To use the UberEats fleet, commissions range from 15% to 30%.
Stephanie Lyn Carlough, owner of Plunge LBC in the Second District, said that delivery fees can substantially alter business revenues, especially when the stay-at-home order lends itself to delivery over pickup.
“This extra percentage can be the difference between us costing money to serve that meal, meaning we actually lose money,” she said.
Councilmember Cindy Allen lent her support to the item, hoping the ordinance would provide relief for small, independent, family-owned and minority-owned businesses.
“As we all know, this pandemic has hit our economy hard,” Allen said. “Lots of folks are just struggling to get by, and they’re more likely to order food and even order more items from these restaurants if they’re not being upcharged.”
The ordinance would prohibit delivery services from charging any amount designated as “delivery fees” for orders that do not include the delivery of food and beverages.
In addition, those same services would be prohibited from charging customers purchase prices for food or beverages that are higher than the price set by the food establishment.
Gough, who is a board member of the Long Beach Restaurant Association, said the association was in full support of the item.
The ordinance will come back to the council every 90 days for councilmembers to make a determination on whether the ordinance is still necessary.
The next city council meeting will take place Tuesday, Feb. 2 at 5 p.m. via teleconference.
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