CALIFORNIA – Senator María Elena Durazo, D-Los Angeles introduced a bill that would require food delivery platforms like DoorDash and Uber Eats to disclose all fees being charged – both to the customer and to the restaurants.
Proponents of the bill say restaurants and customers alike deserve transparency to know exactly what fees are charged and who is receiving them.
Food Delivery Fees
According to McKinsey and Company delivery platforms make their money through:
- Restaurant commission fees – typically 15 to 30 percent of the price of a meal;
- Customer delivery fees – usually $2 to $5 per order;
- Customer-service fees – surcharges of up to 15 percent;
- In-app advertising;
- Tips that subsidize the platform’s operating costs.
Senate Bill 1490 would require disclosure to consumers of the itemized breakdown of the transaction including purchase price, fees/commissions charged to the restaurant, any fees charged to the customer and tips.
Other requirements include disclosure of fees charged for marketing, delivery and order processing.
“This critical California legislation is taking a step toward protecting consumers and restaurants from unfair and harmful business practices of the big tech food delivery apps to establish a transparent and equitable digital marketplace,” said bill sponsor Digital Restaurant Association (DRA).
Data giveaway accusations
Opponents of SB 1490 say the new proposal is disguised as a consumer protection measure and it would end up being a backdoor for large restaurant chains to access competitors’ business information.
“Large chain restaurants, who have the power to negotiate exclusive agreements with different delivery platforms, would love to be able to see what kinds of fees their competitors are paying,” said Chamber of Progress.
The coalition says that if the fees the delivery platforms charge to restaurants were forced to be shared, the large restaurant chains that dominate DRA’s membership would be able to see the deals their competitors negotiated with every delivery platform – undercutting competition.
To read the full bill visit https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB1490#99INT
