Written by Hannah Schmidtler
Mayor Todd Gloria signed an executive order last week capping third-party restaurant delivery fees at 18% of an orders total. Mayor Gloria ordered this directive to help local restaurants that have suffered financially due to the Covid-19 lockdowns imposed by Governor Newsom. Specifically, the delivery fee must be no more than 15% of an online order total and any additional fees cannot exceed 3%. Some third-party delivery apps were charging up to 30%.
Gloria addressed this executive order stating, “In order to protect San Diego businesses and their employees that have sacrificed so much during the pandemic, it is necessary to temporarily restrict the fees imposed by third-party food delivery companies. Capping the per-order fees will ease the financial burden on struggling businesses in our community, will keep food delivery options accessible to consumers, and is an important step to protecting the livelihoods of our neighbors.”
The order was issued in response to a request from Council President Pro Tem Stephen Whitburn along with councilmembers Marni von Wilpert and Raul Campillo.
While this sounds like good news for local businesses, it also presents a problem. Forcing delivery companies to slash their fees by as much as 12% means that they are going to be bringing in less revenue. The companies are unlikely to simply accept that, meaning that lost income will be made up in another way. That could possibly be in the form of increased prices for consumers or less compensation for drivers.
The issue is very similar to the argument against a $15 federal minimum wage. By forcibly driving up payroll costs, business owners are forced to make up that money in some other area. This is the same concept and a big reason why conservatives do not like the government meddling in the free market.
Also as part of the order, Mayor Gloria is allowing restaurants to designate parking spaces adjacent to their storefront for pickup to make the process more efficient.
Photo via iCoderz