Council To Take Action to Protect Small Businesses and Workers Through Cap on Third-Party Delivery Fees
Council Ordinance to Cap Third-Party Fees to 15 Percent of Total Order While Protecting Delivery Driver Pay
[COLUMBUS, OH] Council is giving third-party delivery services a "tip”: Columbus will protect its small businesses and the restaurant community. This morning, November 20, 2020, President Pro Tem Elizabeth Brown and Council President Shannon G. Hardin announced upcoming legislation to cap the fees charged by food delivery companies.
The proposed ordinance will cap the fees that third-party delivery services charge restaurants at 15 percent of the purchase price on delivery or pick-up orders. The cap is intended to help restaurants during the pandemic and will remain in effect for 120 days after pandemic restrictions on restaurant operations end. The ordinance also establishes that delivery services are not permitted to reduce pay or garnish tips from delivery drivers in response to the fee cap.
"Exorbitant delivery fees being sent to out-of-state corporations just make no sense when our local businesses are fighting so hard to keep up during this pandemic,” said President Pro Tem Brown. “Capping those fees protects not only the restaurants who feed our residents but also the workers who make them run, by also ensuring delivery driver pay and gratuity is protected under the new fee cap.”
Many residents use third-party apps and websites to place orders with restaurants, and the COVID-19 crisis has only increased the demand for delivery and takeout options. Service agreements between restaurants and outside delivery platforms vary and often include commission fees of 30 percent or more of the purchase price.
"With Franklin County’s rising COVID-19 rates and the stay-at-home advisory, we’re going to see even more small businesses relying on third-party delivery services. This legislation is critical to keep our small and independent restaurants afloat," said Council President Hardin.
These service fees can have a severe impact on the viability of local small businesses.
Restaurants, particularly small family-owned businesses, have limited bargaining power to negotiate lower commission fees. The legislation is another tool to navigate the crisis and sustain an important source of employment and economic vitality in the City of Columbus.
"While we need federal action to support local businesses, Council is acting now to ease the burden," said Hardin.
On March 15, 2020, Governor Mike DeWine issued an order closing all bars and restaurants to onsite food and beverage service, and limiting restaurants to providing only carry-out service. While this closure was lifted in May, many restaurants have continued to struggle with decreased demand for dine-in services.
"Restaurants add to the character, culture, and vibrancy of our neighborhoods," Brown continued. "As necessary public health restrictions continue to be enforced for as long as this pandemic lasts, this fee cap is an important step to help our restaurants continue operating.”
To watch a replay of the remarks this morning, please visit the City of Columbus' YouTube channel.