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Baltimore City Council approves fee cap on Grubhub, Door Dash, other restaurant delivery apps

A cap on fees charged by third-party food delivery apps was approved Monday evening by Baltimore City Council and will become effective as soon as it’s signed by Mayor Brandon Scott.

The cap, which is the first bill passed by City Council under the leadership of new Democratic Council President Nick Mosby, bars delivery apps from charging more than 15% of the total cost of an order. Typically, apps such as Grubhub, Door Dash, Uber Eats and Postmates take a 30% cut.

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Often a sore subject for restaurateurs, the fees have become a particular concern during the coronavirus pandemic. Restaurants have faced capacity limitations and closures and have turned to takeout and delivery to try to stay afloat. Many owners have pleaded with customers to delete the apps and order directly from restaurants to support local businesses.

The bill, sponsored by Democratic Councilman Eric Costello, is tied to Maryland’s state of emergency and expires 90 days after whenever that order is lifted. The council passed it unanimously Monday on an expedited basis, invoking a rule that allows it to advance bills from second reading to a final third reading on the same day.

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Scott, a Democrat, has pledged to sign the fee cap, either Monday night or Tuesday morning, his staff said.

Baltimore’s fee cap mirrors those implemented in cities such as San Francisco, where caps have been implemented on an emergency basis. Washington, D.C.; Chicago and Seattle also have implemented caps on delivery fees.

Delivery service providers have spoken out against such bans, arguing the caps could force delivery companies to increase costs for customers.

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Michele Blackwell, a spokesperson for Uber Eats, said Wednesday the company maintains that regulating delivery apps could potentially hurt the businesses the city is trying to help.

“Nevertheless, we understand that the council has decided to move forward on this temporary measure. Uber will continue to work with restaurants in Baltimore City and focus the majority of our efforts on driving demand to independent local restaurants,” Blackwell said.

A Door Dash spokesperson told The Baltimore Sun in December the additional costs to customers could result in a drop in orders to restaurants, defeating the purpose of the legislation.

Costello’s bill aims to stop companies from passing along the fees to customers by including a section that forbids delivery services from charging prices higher than those advertised by a restaurant. The bill also forbids delivery apps from garnishing drivers’ tips.

During a committee hearing on the bill earlier this month, no major objections were mounted to the legislation by council members or representatives from several city departments. Baltimore’s law department said the bill is “clearly within the authority of the City Council.” The opinion, by Elena R. DiPietro, chief solicitor for the city, called the legislation “necessary to protect the health, safety and welfare of the city.”

Baltimore’s finance department did not oppose the bill, but did warn it was unclear which city department was responsible for enforcing the measure. Other areas have seen some enforcement issues, a memo from Baltimore Budget Director Robert Cenname noted, citing a Jersey City, New Jersey, vendor that added a $3 fee for customers and shrank its delivery radius.

Takeout and delivery have been an important source of income for city restaurants, which were barred from offering indoor and outdoor dining through much of December and January in an effort to slow the spread of the coronavirus. Restaurants began to reopen Friday as an order from the mayor relaxing restrictions went into effect. Indoor dining remains limited to 25% capacity, while outdoor dining is restricted to 50% capacity. Restaurant patrons in the city are restricted to a one-hour time limit.

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