Fees charged to restaurants by delivery companies will be capped in Washington state as the food industry is placed under new restrictions amid another COVID-19 surge.
Services such as Uber Eats, DoorDash, Postmates, Grubhub and others will be required to cap delivery fees at 15%, and total fees at 18% of an order purchase price.
The proclamation, which goes into effect Nov. 25, follows similar legislation in Seattle, Tacoma, and other Washington state cities. Other metros including Los Angeles and New York are also placing caps on delivery companies, which have fought back against the new rules.
Inslee announced Sunday that indoor social gatherings and indoor dining will be banned until Dec. 14, among other restrictions, as COVID-19 cases hit records in Washington.
As more people turn to delivery to order food from restaurants, the fee caps are intended to mitigate the financial hardship that small businesses are enduring under shutdown orders.
“We recognize the challenges posed by COVID-19 to our restaurant community, and we’re grateful to third party delivery platforms that have made it possible for Washingtonians to continue supporting local restaurants, and allowed many businesses to stay open,” Inslee said in a statement.
“However, these are difficult times. We all must sacrifice during these uniquely challenging times to both support our businesses and slow the spread of COVID-19. We encourage Washingtonians to support their local restaurants safely through delivery and take-out options that are available.”
Inslee’s proclamation also prohibits “the reduction of compensation to food delivery drivers, including the reduction of any amount of tips provided to delivery drivers that results from the restrictions on commission or delivery fees as set forth in this order.”
The proclamation notes that delivery companies typically charge commission fees of up to 30% or higher.
The companies say the fees are necessary to cover operating costs and maintain the app. DoorDash — which just filed to go public — Grubhub, and Uber Eats have reduced some fees in response to the pandemic.
We’ve reached out to the companies for comment and will update this story when we hear back. Update: Here’s a statement from Grubhub:
“Fee caps are well-intentioned but counterproductive at a time when restaurants need more support, visibility and order volume than ever. The caps lower pay for drivers by reducing the number of orders to be delivered, reducing restaurant orders, increasing costs for diners and disrupting an essential supply chain of meals. Ultimately, fee caps cost valuable jobs, tax revenues and important economic activity.”
And from DoorDash:
“DoorDash is dedicated to supporting and empowering local businesses. We recognize the challenges Washington restaurants are facing, and the difficult decisions Governor Inslee must make as we work to stop the spread of COVID-19 and support our local communities. We remain concerned that pricing regulations like this one could result in higher costs for customers, which could lead to fewer orders for local restaurants and fewer earning opportunities for Dashers. We remain focused on finding solutions that preserve choice and ensure Washingtonians can continue to access safe and affordable food delivery.”
In addition to takeout orders, restricted outdoor dining will be allowed at restaurants, which were previously allowed to operate indoor dining at 50% capacity and with parties of five or less. The new restaurant rules went into effect on Wednesday.
The Washington Hospitality Association is urging Inslee to reconsider the restrictions, citing lost income for workers.