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Baltimore City Council to consider cap on food delivery app fees as aid to restaurants amid coronavirus dining ban

Uber Eats
(Courtesy photo)

Third-party food delivery services, accused by some restaurant owners and elected officials of profiting from dining restrictions during the COVID-19 pandemic, would be barred from collecting more than 15% in fees under legislation to be introduced before the Baltimore City Council.

The proposed bill written by Democratic Councilman Eric Costello targets popular apps such as DoorDash, Grubhub, Postmates and Uber Eats. They typically take commissions from restaurants of around 30% of the total costs of orders.

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Restaurateurs and chefs across the country have pleaded with customers to delete the apps and order directly from restaurants if they want to support local businesses amid the pandemic.

Costello’s legislation, which he plans to introduce for the council’s next meeting Jan. 11, would cap fees at 15%, regardless of the business model the vendor uses, he said. Some of the services charge both a marketing and a delivery fee, while others collect one larger delivery fee.

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Costello said the need for the bill has become more critical with a city ban on indoor and outdoor dining that went into effect Friday. On his first full day in office last week, Mayor Brandon Scott announced the new restrictions on dining in hopes of slowing a spike in coronavirus cases.

The ban, which does not have an end date, has been met with resistance from some restaurant owners. They say they are already in a precarious financial position after spending much of the year closed or bound by capacity restrictions on their dining rooms.

“The way the pricing model is set up is really hurting them right now, especially with restrictions on indoor dining,” Costello said. “It’s critically important we provide them with relief as soon as possible.”

Asked about the legislation Tuesday night, Michelle Blackwell, a representative with Uber Eats, said her company drives demand to independent, local restaurants. A Grubhub spokesperson said Tuesday night that he would comment after reading the text of the bill, which was not yet filed.

The council chair in neighboring Anne Arundel County introduced a similar bill Tuesday. The county has banned indoor and outdoor dining for the next four weeks. The bill specifies that delivery services could not defray the cost of complying by paying drivers less or taking a larger portion of their tips. The council is set to vote Monday on the legislation.

Costello said his proposal has the support of both Baltimore City Council President Nick Mosby and Scott, also Democrats.

Mosby said the city is not yet doing enough to support the employees of small businesses affected by the dining ban. Costello’s legislation would chip away at the problem, he said.

“At the end of the day, that was the mayor’s decision. He made that decision,” Mosby said of the table service ban. “Now, as legislators, it’s our right to figure out the things from a legislative perspective we can do to support not just employers, but also employees in this gig economy.”

Scott said his decision to suspend in-person dining was not made lightly, and he reiterated his previous call for city residents to support local restaurants by ordering carryout and delivery.

“I have always said that we must find new ways to offer concrete support to our business community in these unprecedented times,” he said. “I thank the City Council for answering that call and taking swift action to introduce these needed reforms for the benefit of our local businesses, workers and community.”

Baltimore would be the latest in a small group of cities that have attempted a similar cap. In April, San Francisco Mayor London Breed imposed a temporary 15% cap on third-party delivery fees via an emergency order. The cap has been extended several times as the pandemic has worn on.

In May, Washington, D.C., passed a similar cap that will remain in place for the duration of the public health emergency. There, as in San Francisco, the measure faced opposition from third-party delivery services, several of which jointly wrote a letter condemning the move.

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Last month, Chicago passed a fee cap, and Washington state Gov. Jay Inslee announced a statewide cap on such charges, following one Seattle implemented earlier this year.

“Regulating the commissions that fund our marketplace forces us to radically alter the way we do business and ultimately hurt those that we’re trying to help the most: customers, small businesses and delivery people,” a representative for Uber Eats said in an email.

A DoorDash spokesperson said pricing regulations could cause the company to increase costs to customers, potentially leading to fewer orders from local restaurants and less opportunity for the people who deliver on behalf of the company.

“Pricing regulations can also remove options available to restaurants by limiting their ability to opt-in to additional services to help their business,” the company said. “We remain focused on working with policymakers to reach solutions that better support restaurants, customers, and ‘Dashers.’”

Costello said his legislation would be tied to the ongoing public health emergency, expiring 90 days after Maryland’s state of emergency is lifted, whenever that might be. Maryland has been under the state of emergency since March.

Costello said the city law department hadn’t vetted his proposal yet, but there’s precedent to support it.

“I’ve run this idea by folks in the legal community,” he said. “I’m very confident this will be approved.”

Samit Tabet, owner of Byblos in Federal Hill, called the proposed cap “wonderful,” although he said he wished the council would consider an even lower cap.

“The state ... charges us only 6% in taxes,” he said, arguing the 30% fees from third-party delivery services are outrageous.

Tabet said he began his business in 2009 with his wife and only three employees. The pandemic has set the business back by a decade, he said. The couple has tried increasing prices to compensate for the third-party fees but they have also been fearful of “choking” their client base.

“It’s very hard, but we’re still better [off] than other people,” he said. “I’m not going to complain. It’s everybody’s problem, not just ours.”

Baltimore Sun reporter Christina Tkacik and Baltimore Sun Media reporter Danielle Ohl contributed to this article.

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