Facilitating takeout deliveries could soon become cheaper for restaurants in Irvine, where councilors are considering capping the amount third-party delivery companies can charge.
A motion set for discussion during Irvine’s Feb. 9 city council meeting could limit the amount companies such as GrubHub and DoorDash charge customers and restaurants during the COVID-19 pandemic.
The item, initially discussed at council’s Jan. 12 meeting, claims that delivery companies are taking advantage of restaurants and residents who are hurting financially.
“Third-party food delivery services impose significant charges on restaurants owners and their customers who are already struggling under the economic strain caused by the COVID-19 pandemic,” the Feb. 9 agenda item says.
In an attempt to change this, the ordinance is proposing that third-party delivery service companies can’t charge restaurants a delivery fee that is more than 15 percent of the purchase price of an online order. It would also forbid delivery companies from charging restaurants “any combination of fees, commissions, or costs for the [restaurant’s] use of the third-party food delivery service” that is more than five percent of the total purchase price.
The proposed ordinance also notes that delivery companies cannot take any part of a gratuity provided to the delivery person.
In an attempt to prohibit a “workaround” for the delivery companies, the proposed ordinance notes that the companies would not be allowed to raise the prices of food higher than the price set by the restaurant.
Irvine is not the first city to propose this idea, or enact it. According to the memo, Irvine based its 15 percent cap on delivery fees and five percent cap on other costs based on the model of other California cities.
The City of Los Angeles voted to cap delivery and non-delivery fees for restaurants at the same percentages last May, closer to the start of the pandemic.
In the case of Irvine, delivery companies would be required to disclose an itemized breakdown of transactions to customers, including the purchase price of restaurant food, the delivery fee charged to the restaurant, and all other fees charged to both the restaurant and customer.
The agenda said companies looking to get around lowering fees would be met with consequences.
Violators would be subject to a civil action suit in the Superior Court of California to recover all actual damages resulting from the violation and reasonable attorneys’ fees paid if awarded by court.
The ordinance would end when the local emergency for COVID-19 expires.
The memo classifies the change as an “urgency ordinance,” which means that it would go into effect immediately if passed by a four-fifths vote from councilors.