Title
Capping of Commissions Chargeable by Third-Party Food Delivery Service Businesses During States of Public Health Emergencies.
Brief Description: City Council requested a Workshop discussion of this topic, sponsored by Councilwoman Kowalski, as a means to support local restaurants during the COVID-19 public health emergency.
Body
Legislative History
None.
Purpose & Explanation
Regulations imposed in response to the COVID-19 pandemic have significantly impacted restaurants. While many consumers have been eager to support local restaurants, many are using third-party applications and websites to place orders with those restaurants, but such orders may include commission fees of 30% or more of the purchase price. Restaurants, particularly small family-owned restaurants, have limited bargaining power to negotiate lower commission fees with third-party platforms due to there being high demand and only a few companies in the marketplace to provide online order and delivery services. As a result, restaurants face dire financial circumstances during this COVID-19 pandemic, as take-out and delivery are the main options for keeping their businesses in operation.
It is contemplated that capping the commission fee to a maximum of 15% of the purchase price on delivery or pick-up orders, while restaurants are unable to provide unrestricted dine-in service, will accomplish the legitimate public purpose of easing the financial burden on struggling restaurants during a public health emergency while still promoting the availability of prepared food via delivery service while not unduly burdening third-party applications and websites.
Fiscal Impact
Currently Budgeted (Account #, $)
Supplemental Appropriation Required (Account #, $)
X Appropriation Not Required
Recommendation
Suggested Action
Staff asks that Council provide direction. Should Council decide to formally consider implementation of the proposed regulation, an Ordinance amending the City's Bu...
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