Santa Clara Caps Delivery App Fees to Help Local Restaurants

Courier apps such as GrubHub and DoorDash can charge Mission City restaurants no more than 15 percent under a new temporary ordinance.

The new rule passed Tuesday by the Santa Clara City Council comes in response to a steep, pandemic-prompted revenue nosedive in the local food-service industry.

Since shelter-in-place orders became a new normal in mid-March, restaurants have had to massively slash capacity and transition to outdoor-only dining or curbside pickup—if they can even stay in business at all.

The loss of indoor dining has turned delivery apps a lifeline for struggling eateries. But amid higher demand for courier service came fears that those third-party apps would take advantage by jacking up fees on already financially hammered mom-and-pops.

“Several restaurant owners told me they are facing fees as high as 30 percent from these third-party food delivery apps,” Santa Clara Mayor Lisa Gillmor said after the vote. “Many of them have no choice but to pay these fees due to their current reliance on delivery orders. Now, the city is enacting this ordinance to help our struggling restaurants stay in business during the pandemic and beyond.”

The ordinance, which went into effect immediately, also prevents delivery services from siphoning off any part of a courier’s tips.

In addition, the apps must now make all fees, discounts offered by restaurants and gratuity paid to drivers they charge visible to anyone who uses the service.

The new policy will last for as long as the Covid-19 state of emergency does.

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