The cap on meals supply expenses will take impact in Aurora. Tech corporations argue it is unhealthy for enterprise
A Grub Hub delivery driver leaves the company when a customer walks into Katsu Ramen on March 28, 2020. Katsu Ramen is open to takeout and delivery via partner delivery services. Photo by Philip B. Poston / Sentinel Colorado
AURORA | A citywide cap on delivery fees restaurants pay to third-party providers like DoorDash, Uber Eats, and Grub Hub went into effect Wednesday, although it’s unclear whether customers can expect to pay more when they pick up dinner from their porch.
The third-party providers can now charge restaurants a fee of no more than 15% of the purchase price. The law expires on March 31, 2021 or earlier when restaurants are allowed to return to 100% capacity under public health regulations.
“As a temporary measure during the winter months when al fresco dining can be challenging, I think this ordinance is a vital lifeline to help our restaurants survive,” Councilor Curtis Gardner, who sponsored the law, said in one Explanation.
According to Gardner, some Aurora restaurant owners suffered “exorbitant” delivery charges during the pandemic. Currently, Aurora restaurants cannot open indoor kitchens for customers, forcing many to rely on delivery orders when they don’t have the capacity. Patrons can only sit outside of restaurants in specially regulated situations, order takeaway, or opt for delivery, which is controlled by a handful of tech companies.
At a rate greater than 15%, many restaurants are actually losing money when customers deliver through third-party apps, said Patrick Armatas, co-owner of Sam’s # 3 Diner at 2580 S Havana St.
“You basically end up paying to serve them food,” he said.
He said some restaurants paid up to 30% commission to Grub Hub. The company did not respond to the Sentinel’s request for comment.
Armatas said he had already negotiated a 15% cap on Sam’s # 3 shipments after the pandemic shifted sales to delivery and take-out. He said the price was “fair for delivery and fair for restaurants”.
In separate statements, representatives from DoorDash and Uber argued that Aurora’s rules actually threaten restaurants.
“Regulating the commissions that fund our market is forcing us to radically change the way we do business and ultimately hurt the ones we want to help most: customers, small businesses and delivery people,” said Sarah Ashton from Uber.
The pandemic has proven to be a godsend for delivery apps, while restaurant workers are a high proportion of new jobless claims in Adams and Arapahoe counties.
DoorDash had sales of $ 1.9 billion for the first nine months of 2020 after years of losing money.
After Denver capped the cost of delivering groceries, DoorDash charged customers a “Denver Fee” of $ 2 this month.
When asked if Aurors could expect a similar fee, DoorDash spokesman Campbell Matthews said the caps “could result in us increasing costs for customers, which could result in fewer orders for local restaurants and less earning potential for dashers.” “
Aurora’s rules also go into effect one week after DoorDash launched a $ 3.4 billion initial public offering. That makes it the second largest IPO this year, according to Renaissance Capital, which tracks IPOs.
According to Aurora’s rules, third party vendors must include the delivery fee as a line item on a customer’s receipt. The law also expressly forbids companies to shorten the tips of delivery drivers in order to compensate for the difference to the upper limit of 15%.
The plan rules were unanimously endorsed by the city council – a rarity in Aurora – and Mayor Mike Coffman. The mayor has touted a “challenge” for Aurors to travel the world while quarantined by supporting Aurora kitchens from around the world.
“The fact that the regulation was adopted unanimously by the Council (members) and myself speaks for its importance as another way to help our local businesses during the public health crisis,” Coffman said in a statement. “For those who are able to purchase a takeout delivery or order delivery at a preferred local or independent restaurant in Aurora, I recommend you do.”
– The Associated Press contributed to this story.