Baltimore is Latest City to Cap Delivery App Fees Paid by Restaurants
Uber Eats, DoorDash and other apps often take a cut of up to 30%. Baltimore's new policy limits that to 15% of the total order cost. Shutterstock
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Other cities have enacted similar policies, meant to help restaurants struggling during the pandemic. At least one delivery app company has responded with a new customer surcharge.
DoorDash, Uber Eats and other third-party food delivery apps must cap fees they collect from restaurants at 15% of total order costs under a new measure enacted this week in Baltimore.
The Gig Worker Relief Act, passed by the city council on Monday and signed Tuesday by Mayor Brandon Scott, is a temporary measure that expires 90 days after the end of Maryland’s current state of emergency. The measure is intended to help local restaurant owners who often lose money on orders through apps like Postmates and DoorDash, which take a cut of up to 30%, according to a synopsis of the bill.
“These excessive fees are causing hardship for many local small businesses during this Covid-19 crisis,” the synopsis says.
The bill, passed unanimously by the council, also forbids apps from charging food prices higher than the ones set by the restaurants and prohibits delivery services from garnishing tips to drivers.
A handful of other cities have enacted similar policies during the pandemic, including Chicago, San Francisco, Washington D.C., and Seattle (followed later by a statewide ban in Washington).
Delivery providers have opposed the fee caps, saying they result in unintended consequences and increased costs for customers.
In response to proposed caps in Chicago, Boston and Seattle, Grubhub, a company that runs a food ordering and delivery platform, told reporters that the measures were “well-intentioned but counterproductive at a time when restaurants need more support, visibility and order volume than ever."
The company said the caps hurt drivers’ earnings, reduce restaurant orders and increase costs for diners. “Fee caps cost valuable jobs, tax revenues and important economic activity,” Grubhub added.
In response to Baltimore’s policy, Uber Eats on Tuesday night instituted a “temporary local fee” of $1.50 on orders within the city “in order to maintain a reliable delivery marketplace,” a local CBS affiliate reported. The app has taken similar action in other cities, including Jersey City, New Jersey, where it levied a $3 customer surcharge after Mayor Steven Fulop enacted a delivery fee cap of 10%.
Some restaurants in Baltimore are reopening for in-person dining after months of restrictions designed to prevent the spread of coronavirus, though customers must adhere to a one-hour time limit and overall capacities remain limited.
Kate Elizabeth Queram is a staff correspondent for Route Fifty and is based in Washington, D.C.
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