Why Modesto is capping what delivery apps charge restaurants during COVID
Modesto is temporarily capping how much Grubhub, DoorDash and other delivery services can charge restaurants to help them survive in the new coronavirus pandemic.
The City Council voted 6-1 on Tuesday night for an urgency ordinance capping the fees delivery services can charge restaurants at 15% for each order. The cap applies to delivery as well as takeout orders the restaurants’ customers make using the delivery service’s apps.
The ordinance takes effect immediately, but the City Council can revisit and modify it if council members believe that becomes necessary. The council is expected to rescind the ordinance once the pandemic is over.
Cities across California and the nation have capped delivery service fees during the pandemic. Modesto officials say based on their research of roughly a dozen cities, 15% is the most common fee cap.
The delivery services have become a big part of many restaurants’ business because of the pandemic’s public health restrictions, which have limited how restaurants can operate. Under the current restrictions, restaurants in Stanislaus County can offer outdoor dining and takeout and delivery. Indoor dining is banned.
A DoorDash official asked the City Council to consider a 20% fee for deliveries and 10% for takeout orders. He said the company cannot cover its delivery costs with a 15% fee. He said Modesto’s action could harm its restaurants and delivery drivers. A delivery driver also spoke against capping the fees.
But Modesto resident Emerson Drake said it’s his understanding drivers make their money through tips. He also said if the city is going to help its restaurants it also must enforce the restrictions against indoor dining to ensure everyone is playing by the rules.
He said his wife has notified the city that the Velvet Grill & Creamery and My Garden Cafe are serving customers indoors, but the city has taken no action. Many restaurants and businesses throughout Modesto and Stanislaus County are not following the public health restrictions.
Councilman David Wright voted against the ordinance in part because he feared it would hurt delivery drivers and said restaurants already recover the cost of delivery fees by charging the customers who use delivery more.
