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Seattle Issues Emergency Order to Cap Delivery App Fees for Restaurants at 15 Percent

And 100 percent of tips from apps like Grubhub must go to delivery drivers

A pair of delivery bikes with GrubHug bags slung over the handles
GrubHub and other third-party delivery apps sometimes charge as much as a 30 percent commission on orders.

On Friday afternoon, Seattle Mayor Jenny Durkan, along with city council president M. Lorena González and council member Lisa Herbold, announced an emergency order intended to help restaurants during the COVID-19 crisis: third-party delivery apps can now only charge restaurants up to a 15 percent fee.

The order also requires that 100 percent of tips from those apps go to the drivers, and it includes provisions to make clear that it is illegal for a third-party platform to reduce driver compensation rates as a result of this action. It will be in effect until dine-in services are allowed to resume.

“Unfortunately, some third-party delivery services are charging exorbitant commission fees, which exacerbates the financial hardship many restaurants are already experiencing,” said Mayor Durkan through a statement. “This commission cap will be critical to ensuring that delivery and takeout remain viable options and don’t cause increased financial hardship.”

“This will provide immediate relief for restaurants,” says Dan Austin, the owner of West Seattle Italian restaurant Peel & Press and a co-chair of the West Seattle Government Advocacy Committee. “It’s more money to help cover payroll.”

This order follows one that San Francisco issued two weeks ago, which also capped delivery fees at 15 percent. And several other cities across the country, such as Los Angeles, Chicago and New York, are considering similar actions. At the moment, apps such as Grubhub can charge a commission anywhere from 10 to 30 percent on orders, putting an additional financial strain on restaurants already taxed during Washington’s stay-at-home mandate.

Several companies affected have pushed back against the cap. Grubhub — which recently announced a deferral of $100 million in fees, but not a cancellation — had said that the San Francisco move would jack up costs for customers by as much as $10 per order. Doordash (which also owns Caviar) points to the fact that it has already slashed its commission and marketing fees by half through May due to the crisis, and called a proposed order in Chicago to cap fees at 5 percent unconstitutional.

But the push against high delivery app fees and sketchy practices has been going on even before COVID-19 affected the food scene. In early February, Seattle fine dining destination Lark ran into issues with Seamless when the service listed the restaurant on its app without permission, which several apps have done in recent months to the frustration of restaurant owners.

Many of the apps argue, during normal times, that they are helping drive more business to restaurants via takeout and delivery, bonus money after dine-in services. But when there is no dine-in services at all, restaurateurs and chefs would contend that they are simply taking away money, period.

“Instead of a symbiotic relationship, it’s been a parasitic relationship,” says Austin, adding that a recent commercial called “Restaurants Are Our Family”, touting GrubHub’s affection for clients, rings hollow to him. “If they really wanted to help, stop spending millions on advertising your platform and get that money to the restaurants you claim to support.”