City Councilors Ed Flynn, Michael Flaherty, and Matt O’Malley will hold a hearing this Friday, May 15, at 12:30 p.m. to discuss how commission fees from third-party delivery companies have been affecting Boston’s restaurant industry during this pandemic. As local restaurants have become dependent on delivery for their sales, many are concerned about the high commission fees paid to third party delivery companies. This hearing aims to discuss how we can help our local restaurants during this pandemic, including the possibility of placing a cap on delivery commission fees during this time. The hearing will be chaired by Councilor Julia Mejia, chair of the Committee on Small Business and Workforce Development, and will be held virtually via Zoom.
Many restaurants use third party delivery companies such as Grubhub, UberEats, Doordash, or Postmates, and their commission fees can be up to 30% per order and reach hundreds of thousands of dollars every year. As restaurants become more reliant on delivery sales as a critical piece of their revenue, they’re now expected to pay an even larger portion of commission fees while already struggling during this pandemic. Moreover, it is difficult for restaurants to negotiate a favorable commission fee structure because they lack negotiating power due to the industry being dominated by only a few third party delivery companies.
To address this issue, San Francisco has placed a 15% cap on delivery commission fees through an emergency order back in April, and the Mayor of Baltimore has written a formal letter to delivery companies requesting them to cap their fees to 15% for local restaurants. More recently, the Cambridge City Council and Mayor filed a policy order to talk about capping the delivery commission fees to 10%. This hearing will also discuss the possibility of placing a cap on commission fees in Boston.
“Restaurant owners and residents in the industry are deeply concerned about the excessive delivery commission fees paid to third party delivery companies,” said Councilor Flynn. “During these uncertain times, it’s almost predatory to charge 30% fees to our local restaurants that are heavily reliant on delivery revenue to help them survive and get to the other side of this crisis. I want to thank Councilors Flaherty and O’Malley for their partnership, and I look forward to this important discussion with pertinent stakeholders.”
“Regulating delivery fees was already a topic of discussion among many in the restaurant industry prior to COVID-19, but, as with many things, this pandemic has added an increased sense of urgency to our action on this matter,” said Councilor Flaherty. “I recognize that these delivery services have bills of their own to pay, but to this point their practices feel exploitative. My hope is that the stakeholders can come to a solution that is economically viable for the restaurants, delivery companies, and consumers independent of a hearing, but nonetheless look forward to working on the issue and if necessary, a productive hearing on the matter.”
“This measure provides relief for Boston’s restaurant industry during the coronavirus pandemic,” said Councilor Matt O’Malley. “Third party delivery service fees during this time are absolutely crippling many local restaurants while the delivery companies are experiencing windfalls. We are aiming to cap the fees as a means of supporting our local restaurateurs as well as their customers.”