The fee cap experiment is probably over
Commission caps imposed on third-party delivery services will likely become one more relic of the Covid era.
The city of San Francisco doesn’t want to fight with delivery services anymore, it seems. SF has reportedly struck a deal (if you can call it that) with DoorDash and Grubhub after the pair of delivery giants sued the city over its permanent commission caps. They’ll drop the pending lawsuit in exchange for changes to a city law that currently caps commissions restaurants pay delivery services at 15 percent.
San Francisco was the first city to make Covid-era fee caps permanent, voting in June 2021 to impose a 15 percent cap on the commissions restaurants pay delivery services. The apps pushed back immediately, calling the caps unconstitutional.
Now, it seems like the big tech companies are getting what they want in San Francisco: the ability to charge restaurants more for services beyond basic delivery. The city, in return, will mandate a 15 percent cap on commissions paid for “core delivery services.”
Conveniently, this falls within — or pretty close to — the apps’ current pricing strategies: DoorDash announced a new three-tiered pricing plan in the spring of 2021. Its most basic marketplace plan costs 15 percent commission, a rate that DoorDash president Christopher Payne said, during a call with press, was not in response to the caps levied by cities. Instead, Payne said, the changes came after listening to feedback from restaurants.
Aaron Peskin, the San Francisco city supervisor who sponsored the original fee cap legislation is now the sponsor of the amended proposal. Per coverage in the SF Chronicle:
Peskin doesn’t see the amended ordinance as a concession to the tech companies, but rather a win for the city and restaurants. Business owners get protection and flexibility, he said, while San Francisco avoids a costly lawsuit.
The emphasis on that last part is mine, because, well, this move seemed inevitable.
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