Third-party food delivery companies ordered to cut fees
Restaurants, one of the hardest hit industries even before this pandemic, were facing additional punishment when they were ordered to do take-out only and no more indoor dining was allowed.
While take-out business for some works, most restaurants suffer additional injury when it comes to the proliferation of third-party food delivery services which take an average of 25-30 percent for each order from the eatery.
In recent months, more and more restaurants have felt the sting of services like Grubhub, DoorDash, etc., and hope to increase their already slim margin to stay afloat.
The Pasadena council on Monday unanimously approved a ceiling of 20 percent on delivery services that work within the city limits. Councilman Victor Gordo said it was necessary to put a cap on the services to avoid price gouging.
Gordo said curbside pickup is preferable for all concerned and especially to the restaurant.
The third-party services also have been accused of grabbing tips. Tips were also protected by council for this temporary period, ensuring they land in the hands of delivery drivers.
The 20 percent cap figure represents a change from the 15 percent total cap that was originally recommended to the council in a staff report prepared by City Manager Steve Mermell.
Michelle Garrett, project manager for the city’s Department of Economic Development, said the late change came about to mirror the cap the L.A. County Board of Supervisors passed on Tuesday.
Mayor Terry Tornek was concerned, however, that the ordinance might prevent these third-party services from working in Pasadena. Staff felt that these businesses would still operate despite the cap.
Councilmember Steve Madison stated that third-party delivery systems and the way tips are handled is a complex issue and he felt a little uncomfortable with the emergency ordinance. Gordo agreed with Madison regarding the complexity and vowed to evaluate the cap after the 90-day period.
The council mutually agreed to the price gouging ceiling cap for 90 days.
