City Caps Meal Delivery Fees Charged to Restaurants

Third-party food delivery vendors will be limited in how much they can charge San Marino restaurants for their service, but likely not until March.
That’s the upshot of a 3-2 vote by the San Marino City Council last week on a proposed urgency ordinance. Such an ordinance requires at least four votes for immediate implementation, so instead the policy will go into effect after the usual second reading of the ordinance and a 30-day grace period.
Vice Mayor Susan Jakubowski, along with Councilman Steven Huang and Councilwoman Gretchen Shepherd Romey, supported the ordinance, which caps vendors’ delivery fees assessed on eateries to 15% of the bill. Mayor Ken Ude opposed the notion altogether, while Councilman Steve Talt’s apparent reason for opposing it is that he wanted the limit to be 20%.
Talt then attempted to call for a vote on an urgency ordinance to immediately impose the 20% limit, but ultimately withdrew the item; it became evident that the council would ultimately have to settle on an amount, and no one else indicated a willingness to budge from 15%.
Still, Talt did secure one victory in last week’s vote: The measure is slated to expire on Aug. 1, unless the council extends it further. Because the ordinance did not concern land use, it did not require a sunset clause. An earlier suggestion was to have the ordinance run concurrent with the ongoing states of emergency for the coronavirus pandemic.
“I don’t want to rely on Dr. Barbara Ferrer and Gov. Gavin Newsom’s determination as to when the state of emergency is such that we can stop enforcing this law,” Talt argued. “I think that we should exercise our own decision-making authority.” Ferrer is Los Angeles County’s public health director.
The ordinance was presented after a survey of the city’s eateries indicated support for a limitation on delivery fees, according to Community Development Director Aldo Cervantes. Delivery vendors — such as Postmates, Grubhub, Uber Eats and DoorDash — typically charge upward of 30% of the bill as a delivery fee for vendors, according to Cervantes’ report.
Fees of that size add strain to restaurants’ already notoriously low margins, and restaurateurs’ lobbying has helped usher in similar fee caps in Los Angeles, Glendale, Pasadena, Alhambra and West Hollywood; L.A. County also has imposed a limit on its areas, while San Gabriel and South Pasadena also are considering their own caps.
Talt said he wanted the cap to be levied at 20% to align with Pasadena’s limitation; the other restrictions have been at 15%.
Ude was interested in data on how caps affect the business relationships between eateries and delivery vendors, and also whether the use of these third-party vendors increased since the start of the coronavirus pandemic.
“I have not had the opportunity to do that level of research,” Cervantes said in response. “With the COVID experience, I can imagine it going up [in use], but I don’t have the data with respect to outside cities.”
Jakubowski and Shepherd Romey both expressed a desire to lend a helping hand to businesses, a sentiment shared by Talt. Huang admitted to having a more laissez-faire attitude about it but came around to supporting the ordinance because of its sunset date.
“I really don’t like this, because I believe in the free market,” Huang said, “but we are in a special time with COVID, so I can support this with Aug. 1.”
Ude, on the other hand, stuck to his market instincts.
“I, too, want to support the local businesses in town, but without any data on this, I don’t know if this is going to hurt them or help. I’m afraid it may hurt them,” he said. “I believe people are used to paying convenience fees for having third-party delivery and that the free-market system will work this one out. I have a hard time supporting this.”