The FTC examines restaurant pricing on delivery platforms
Will forced transparency help or hurt independent restaurants?
The government is scrutinizing delivery apps again. For the next month, the Federal Trade Commission is seeking public comment on a proposal that it says could prevent unfair and deceptive practices in food and grocery delivery. The consumer protection org wants people to weigh in on delivery charges, variable and contingent fees, and personalized (read: variable) pricing inside popular food and grocery delivery apps.
The delivery companies get grumpy when the government pokes around or attempts to regulate their business; that’s assured. But there’s one facet of the FTC’s proposal that’s going to reignite an old argument: Should restaurants charge more for menu items on third-party platforms?
Restaurants do this and platforms allow it. A restaurant’s position is clear: they paying a premium to sell menu items through the apps, so diners should pay a premium for the convenience of accessing them. Elevated prices help restaurants absorb commissions the platforms charge.
Now, the FTC seems concerned that these differences in price could be deceptive, spotlighting one of the few bits of leverage restaurants have on platforms that are otherwise largely outside of their control. In its call for public comment, the FTC asks:
“Do online food delivery platforms clearly and conspicuously disclose whether the prices of items ordered are the same as, or different from, the prices of the same items offered in the store or restaurant?”
To be clear: the FTC isn’t coming for restaurants’ pricing power. But they might be coming for platform-level disclosures that would highlight the sort of pricing discrepancies that’ll anger the apps. Think about it: If large apps are forced to “clearly and conspicuously” disclose that the same menu items are available for less money elsewhere — whether in-person at a restaurant or on a rival app or platform — they could lose business.
In the past, DoorDash (for example) has encouraged but not required restaurants to keep app prices close to in-store prices. In 2023, the company said so-called “significant discrepancies” in menu prices can result in a significant sales decline for restaurants, including a 78 percent reduction in reorder rates from customers. Inflated prices are among the top complaints from diners who order on the platform, they added.