62 ms·

Portland approves 10% cap on fees that food delivery apps can charge restaurants

502 points by Shivetya 6y ago

albntomat0 6y ago
Seems like a solid move, given the capture of the market by the food delivery apps, and their shady business practices (like the thread from a while ago where a delivery service was making fake websites for restaurants, without their knowledge or consent). Why have this expire post COVID though?
- mynameismonkey 6y ago
  I believe this is a power granted by the state of emergency, when that ends, the power to mandate it ends. At that point they'd have to pursue other legislative avenues.
- itsoktocry 6y ago
  >Seems like a solid move Are any of these food delivery companies even making money? What will capping their fees do except make them lose even more?
  - atonse 6y ago
    I'm just reading more that this business model was never going to work the way it is right now given the thin margins in restaurants and the cost of delivery drivers. With automation, it might change the economics. I think that's what everyone's betting on. I think the Ubers and all are just trying their damndest to not completely drown until driver automation reaches a certain stage. They obviously can't openly say that because there would be revolts from their drivers.
    - ghaff 6y ago
      >They obviously can't openly say that because there would be revolts from their drivers. Uber at least has been quite explicit about that. It's somewhere between delusional and what's known in the vernacular as "lying" but investors who are either naive or are cynically bought into the greater fool theory lap it up. Delivery specifically can work in dense areas but it mostly relies on local kids or family members working for peanuts and can't really pay for overpriced SV engineers or VC yachts.
  - Nextgrid 6y ago
    Food delivery worked for decades when it was done by the restaurant itself so worst-case scenario we wouldn't lose much as these companies go bankrupt and we go back to restaurant-provided delivery. In fact, with all their tech and economies of scale, I'm surprised food delivery services are doing worse in terms of per-unit profitability than the low-tech restaurant-provided ones despite already charging excessive fees. I guess the reason is that the various venture capital firms poisoned their own well by subsidizing the services and competing at below-cost pricing.
    - paulgb 6y ago
      You're right, and that's why I'm genuinely confused by what's going on. Restaurant delivery used to be a healthy market that didn't need to eat up external capital. Now we have a situation where: - Restaurants say they are paying too much. - Delivery companies are losing money. - Customers are paying fees to the sites in addition to the delivery cost we used to pay. What gives? It seems these can't all be true.
      - marcinzm 6y ago
        In NYC I'm guessing most restaurants paid illegal immigrants in cash to deliver for them. Not sure about elsewhere. That lowers the cost a lot versus having a legitimate delivery business with legal workers and taxes.
      - belltaco 6y ago
        Add to that drivers complaining that they're getting exploited. But yes, all of those can be true. Paying someone for 30 to 45 minutes of their time is expensive.
        paulgb 6y ago
        > Paying someone for 30 to 45 minutes of their time is expensive. Definitely, but this was also the case before Uber Eats et al.
        6y ago
  - r0maia 6y ago
    Who should be losing money? The delivery apps or the restaurants?
    - cocoa19 6y ago
      Neither, a business that loses money is not a business.
- spacephysics 6y ago
  On paper it looks good, and given the players in the arena, there’s not much competition, especially since there’s a high bar of entry for new competition. Perhaps the idea behind not imposing such regulations is a free market argument, in which the most efficient price won’t be selected for, thereby not producing the optimal supply/demand. I would argue against this point that we would be assuming perfect competition, and given the anti competitive behavior of gig economy companies in this space (such as buying restaurant domain names, making fake websites with phone numbers they own to trick people into thinking they’re ordering directly) and lack of competition, this seems appropriate for now. Though the policy timeline should be extended, I don’t believe it should be indefinite. When the aforementioned issues are resolved, I’d agree with the free market side. In China, if I recall correctly, they have a food economy such that it’s cheaper to order take out, and have the food delivered, than actually cooking. We have inefficiencies In the infrastructure, less population density, and lack of competition that prevents us being in a similar boat.
  - londons_explore 6y ago
    > In China, if I recall correctly, they have a food economy such that it’s cheaper to order take out, and have the food delivered, than actually cooking. Is this true? Here in London, a typical delivered meal would cost ~$20, whereas a weekly shop and cooking probably takes 5 hours/week, but costs only ~$2 per meal.
    - borkt 6y ago
      I believe so in some areas, but only because they are using kitchens/ingredients that cost less than restaurants or stores, IE located in bad areas, conditions/treatment worse for cooks, payment less for cooks, etc. Not something that should be supported but something that technology unfortunately makes possible and convenient
      - mantap 6y ago
        This is just reflective of inequality. I don't know about China specifically but in other asian countries that I know, most locals buy their ingredients at the market, and grocery stores target richer less price-conscious consumers. So it's certainly possible that the markup that the grocery store applies is greater than the cost of cooking and delivering the food, but that doesn't mean that it's cheaper than buying the ingredients at a market and cooking it yourself.
- NovemberWhiskey 6y ago
  ... because we generally think the free market is a good idea?
- JackFr 6y ago
  > Why have this expire post COVID though? Because COVID has entirely transformed the economics of owning a restaurant. It might be worthwhile revisiting this in the future when eating in restaurants is available (and safe).
gjs278 6y ago
considering the food delivery apps don’t make money, I don’t see how this will help anything
jkinudsjknds 6y ago
A lot of numbers get thrown around in these discussions. Is it accurate to say that, even on the often quoted 30% fee, that the apps are running a loss? Is there any chance of running profitably with this cap? The cost for delivery is already very high relative to the price of the food. Not opposed to it personally.
Jommi 6y ago
Let's see if they roll this into their prices
falcolas 6y ago
Are any of these food delivery app services actually making profit right now, or are they just burning VC capital? A news podcast I listened to yesterday made the statement that every food delivery company is doing deliveries at a loss. This seems problematic for making delivery a viable business without forming a monopoly to get the scale required to make things profitable.
- darrenoc 6y ago
  Nope, they don't make any profit even when charging 30% fees. So this 10% cap will probably cause them to withdraw from the market.
  - lifeisstillgood 6y ago
    If thats true, there is not a market to withdraw from ...
  - iso1631 6y ago
    I've had delivery takeaways in British towns and cities for 2 decades, well before the likes of ubereats and deliveroo. Those companies do their own deliveries and manage to make enough money to not even charge more for delivery (or offer a collection discount) - although usually a minimum cost of say £20. Why can't VC companies do it that efficently?
    - falcolas 6y ago
      Honestly, those delivery companies are probably underpaying their employees for delivery. I've worked at a pizza delivery company, and including tips, I earned about $140 a day (inflation adjusted, post-taxes) for delivering pizza all over town. It was certainly not enough to provide for a long-term living, given the vehicle upkeep costs and gas.
      - atdrummond 6y ago
        If I worked that full time, I could easily afford my apartment and other expenses. (Castletown, Isle of Man.) Now, if I still lived in London? Different story. Certain restaurant types (high margin, food well suited for delivery) and locales (high population density) seem well suited for delivery. The local steak house? Probably not, for a number of reasons: - The main profit generator at many sit down venues, drinks, are unlikely to be ordered. - Impulse add-ons, especially dessert, are less likely. Even with dark pattern upsells on apps. Dining out has many minutes or hours during which additional ordering opportunities are available. Ordering out is a single discrete event. - On platforms that don’t work with the restaurant, the option of a higher margin delivery-only menu doesn’t exist. Items with low or negative margin can go out the door that otherwise wouldn’t. - Delivery services seemingly take more for merchant processing than many restaurant chains I’ve helped secure acquiring for. Likely due to much higher chargeback/fraud on digital apps than through traditional delivery or in-restaurant. This is a killer on a low margin vertical such as dining.
chvid 6y ago
In a country where tipping of 20% is the norm ... there is all of sudden a cap of 10% on what the delivery guy can make?
- albntomat0 6y ago
  It's a cap on what the delivery company can charge the restaurant, not including what they charge the person doing the actual order.
- aroch 6y ago
  That's not what this is...? It's a cap on the commissions UberEats/Doordash/whatever can charge on an order. To, hopefully, prevent the commission structure from causing places to lose money on orders ($10 order with 20% Doordash; costs the restaurant $8.50; Doordash charges $2 commission; restaurant loses $.50 on the order)
- yangminded 6y ago
  It caps the fee that the delivery service can take. You can still tip the delivery person as much as you like.
  - ceejayoz 6y ago
    It's not even that. They can still put a $500 delivery fee on the bill, if they want. They just can't hide it in the food costs anymore, and take it out of the restaurant's cut.
- fipar 6y ago
  Do you believe that the full delivery app fee goes to the delivery worker?
  - chvid 6y ago
    Who is the delivery worker? Is it the guy on the scooter? The app developer in the office? The marketing guy brought your attention to the take-away place and caused you to make the order? Since all these services are operating at the loss, the "delivery worker" might actually get more than the full fee.
londons_explore 6y ago
I'd like to see this rule applied only if the delivery provider insists that the menu prices be the same with or without delivery. Personally I think a provider of any 'value add' service being able to dictate the price without their service is insane.
- bryanlarsen 6y ago
  Is this not the case? It looks like it's a cap of 10% on what the app can charge the restaurant. It doesn't say one way or another, but I don't see any restriction on what the app can charge the consumer. The big problem isn't so much the size of these fees, the big problem is that these fees are hidden. Like you, I'd rather see a 0% cap, requiring the app to charge the customer directly.
  - londons_explore 6y ago
    Some services, like Airbnb for example, specifically say a house owner is not allowed to put a different price on Airbnb Vs some other site. That means the house owner must charge bookings not via Airbnb a higher price than normal to recoup the fees paid on Airbnb bookings. That should, in my opinion, be outlawed.
andy_ppp 6y ago
So as I understand it Deliveroo and Uber eats charge 25% of the food costs, plus delivery fees on top. Uber eats I know is losing money and Deliveroo are losing a few hundred million per year on revenues of about $500m. Basically cutting the food percentage like this to 10% would imply delivery services are permanently unprofitable? Why have all these restaurants signed up if 25% is so unfair?
- wilde 6y ago
  They haven't. Grubhub just scrapes business listings and pretends restaurants sign up. https://www.theverge.com/2020/1/29/21113876/grubhub-seamless-fake-restaurant-listings-no-permission-postmates-doordash https://www.theverge.com/2020/1/29/21113876/grubhub-seamless...
  - andy_ppp 6y ago
    So people are willing to pay over inflated prices for takeaway? That’s capitalism for you...
  - SeanLuke 6y ago
    If restaurants haven't signed up, then how are they getting fees from delivery services?
    - brianlweiner 6y ago
      In at least some cases ... the prices you see on grubhub may be higher than the actual prices the restaurant is charging. E.g $17.99 vs $14.99
      - chrisseaton 6y ago
        So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved. What is everyone's problem? Why do we want to interfere with this?
lifeisstillgood 6y ago
IMO regulation should be there to protect the smaller 'people' (small family businesses, or actual people) from abuse by larger entities, or to encourage socially beneficial change (which usually tends to benefit the smaller players anyway). So this seems a win on my part.
obibring 6y ago
This is the right move - local restaurants are hurting and, sadly, the internet is a place where big corps with large budgets have leverage over passionate little guys working their butts off. For those who want to help, I built a chrome extension similar to Honey that shows a local restaurant's direct ordering website as you're about to order from that restaurant thru a third party service. If direct ordering isn't available, it will also show you if that same order is cheaper elsewhere. If you have a favorite local restaurant that accepts direct orders, please help us add them to our system by filling in this form: https://platerapp.app.link/JACVBOFUY7 https://platerapp.app.link/JACVBOFUY7 For those interested in checking out the extension, it can be downloaded here: https://platerapp.app.link/tDSD3mUTY7 https://platerapp.app.link/tDSD3mUTY7 (it doesn't collect browsing history or sell personal info or anything of the sort)
- slugiscool99 6y ago
  Fantastic idea! If a restaurant offers delivery themselves, it's a no brainer to order directly from them. Usually it's cheaper and faster than ordering through an app. Hope this gains traction.
  - cromka 6y ago
    I dont agree on the "faster" part. Uber or Doordash manage their own delivery people and they're vastly more efficient than the restaurants' own. If you look at Yelp or Seamlesss negative reviews, you'll notice that most of them complaint about delivery service. If there's one thing that the restaurants can benefit from when using Uber or Doordash is having their reviews on those platforms based solely on the quality of food itself.
    - ajzinsbwbs 6y ago
      When I order delivery from a restaurant, an employee (maybe the owner’s kid) comes and delivers the food directly to my house when it’s done. It‘s generally faster than the app model where you need to wait for the driver to go to the restaurant to pick up the food, then come to your house while possibly stopping at other restaurants and/or houses on the way. I could see how the restaurant delivery would be worse if that particular restaurant is bad at delivering. Also, the app model does seem like it should be cheaper at scale by using the deliverer’s labor more efficiently.
discopicante 6y ago
This reminds me of Ticketmaster vs. Pearl Jam in the 90s where the band exposed that Ticketmaster takes a much bigger cut that ticket holders didn't see in addition to a small 'ticket fee' that the ticket holder did see. I remember during that time that the general consensus from music fans was that Ticketmaster was an evil and greedy company. Restaurant customers really need to change their perceptions and understanding of restaurant economics before it collapses under the current pressure – many will not return for a long time, if ever.
- jiofih 6y ago
  The sad thing is I don’t believe that situation has changed - if anything they take an even larger chunk, and even figured out a way to profit multiple times from the same ticket by owning the reseller platforms.
- bawolff 6y ago
  I dont really see why its my responsibility as a consumer to police if business deals resturants engage in are "fair". That is the resturant's job. Its part of running a business. Actually its the main part. If the deal doesn't make financial sense - then the business shouldn't make the deal. If the business cannot survive neither taking the deal nor not taking it, then the business is not viable and it should go out of business. At most i support a law requring that resturants can set different prices for uber eats than for walk in customers
  - castlecrasher2 6y ago
    How would restaurants have a choice, here? As far as they know, Uber Eats/Doordash/etc are just "regular customers" but are really just scalping the restaurant's product.
    - delfinom 6y ago
      Scalping product AND funneling all the blame on their fuckups onto the restaurants. It's a american rent seekers dream gig.
Slix 6y ago
I feel super guilty ordering from food delivery apps. But I seem to have no choice if I want delivery.
- giarc 6y ago
  I'm in the same boat. I was even given a large gift card recently for SkiptheDishes (Canadian food delivery app) by co-workers so I'm forced to use it. I want to support local restaurants, but I'm starting to question whether my order is actually a lose for them. I read this article and actually looked up my city councillor and emailed him. I asked if council had considered this and told him I would support this type of move.
  - dubcanada 6y ago
    No your order is not a loss. Just because Skipthedishes takes 30% does not mean you placing an order is losing the restaurant money.
maltelandwehr 6y ago
Next week there will be complaints that food delivery services are no longer catering to certain areas. Instead of accepting that it is just not profitable for them, journalists will label it as backslash or an act of punishment. Same thing happened in others states/cities that implemented similar rules. The winners are people living in central areas of the city with lots of restaurants. The losers are the poorer outskirts. I fully support the idea behind this rule. But this implementation has been proven to not work.
- colinmhayes 6y ago
  I don't understand why people in central areas of the city order delivery. There are 10 amazing restaurants within easy walking distance of me, why order delivery when I can walk for 5 minutes instead?
  - switch007 6y ago
    Depression, chronic fatigue, disabilities, anxiety...?
  - flerchin 6y ago
    Sick in your apt with covid for one.
  - donatj 6y ago
    - There is a pandemic going on - Not everyone is physically able
  - dubcanada 6y ago
    Cause people are lazy/committed to something else/working too much/sick/what ever else? They wouldn't be ordering delivery at all if they weren't. They would make their own food.
  - fortran77 6y ago
    If you have enough discretionary income, why not circulate it and help expand the econony? I'd never have a problem with any of my neighbors spending money, and especially not locally.
avita1 6y ago
The cynic in me > noted that the city rule has a provision that drivers’ pay can’t be reduced because of the fee caps This seems impossible to enforce right? The city can't reasonably have any insight into why driver fees change.
airstrike 6y ago
Why does it have to be a percentage? Taking the food from point A to point B costs the same whether it's sardines or caviar. I never understood this... Seems like charging for the distance traveled and even the time of day would make a lot more sense
- talideon 6y ago
  It's a cap. It's not a statement of how _much_ you can charge, just what the maximum charge can be. How much you actually charge can be based on the things you mention, but you can't charge any more than that 10%. Also, a maximum %age is easier to regulate, while the factors you mention are significantly harder to regulate. Moreover, %ages don't need readjusting to account for inflation.
- BurningFrog 6y ago
  It's a symbolic gesture, not a reasoned policy initiative.
- zild3d 6y ago
  > Taking the food from point A to point B costs the same whether it's sardines or caviar orders for 1-2 people yes, but that doesn't handle large orders for parties, etc
  - airstrike 6y ago
    Sure, then make it f(number_of_items, distance_traveled, time_of_day)
cocoa19 6y ago
I disagree with this move. Why should we force a cap rather than let market competition improve prices? I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant. Then I can decide if the time savings is worth that 25% or not.
- _sbrk 6y ago
  Indeed. Let the market discover the proper price for this service.
  - _wldu 6y ago
    The market can't discover this when consumers are misled by the delivery services. 10% is reasonable. Let the delivery service add a fee to recover their cost rather than take the food provider's profit. Otherwise, these food providers are going to go out of business (and be bought by the delivery services).
    - _sbrk 6y ago
      The market determines what is reasonable, not you (or any one person). "Recover their cost"? What is this, communist Russia? So what if the food providers sell off to the delivery services? Perhaps it will result in a better match for the market demands. Preserving jobs isn't the goal of capitalism, profit is. Those businesses who try to go too far toward extreme profit usually fail when smaller, more nimble upstarts dig the foundations out from under the bigger ones.
- ceejayoz 6y ago
  > I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant. Isn't this what this does? It's a cap on the hidden cut these apps take from what the bill shows as the restaurant's revenue. Instead of taking 30% of my $10 pizza, Uber/Grubhub/etc. now have to decide to put that $3 in the fee they show to the user if they want that revenue.
inkaudio 6y ago
This is a regulatory response to Silicon Valley’s implementation of predatory pricing. Let me explain: Predatory pricing is defined as “the pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market.” For silicon valley startups like Doordash and Grubhub this is accomplished by acquiring customers at a significant loss in ways that may often seem idiotic. example: Doordash and Pizza Arbitrage https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852 The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%. Since predatory pricing is illegal, this response is justified. However, it would be better if regulators enforce predatory pricing rules to begin with, which they rarely ever do. for more info on predatory pricing rules in America see: https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/predatory-or-below-cost https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
- MisterTea 6y ago
  > The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%. You fight back by calling your order in and having them deliver it or pick it up yourself. I do this 99%* of the time as I refuse to pay a web server $8+ order+delivery fee for a meal that costs the same. It's absurd to think that people are so lazy that they cant pick up a phone or walk a few blocks/cycle/drive to get their meal. *save for the rare late night drunk+high AF Dominoes orders.
  - mchanson 6y ago
    Or just regulate the dumb behavior of these dumb start ups to not distort the market in dumb damaging ways,
    - MisterTea 6y ago
      Do you need these services that badly that you're willing to get the government involved? If you don't like the product or the company ethics then don't give them money. The only lesson greed will ever learn from is No Sale.
swalsh 6y ago
This feels like capping extortion. The real problem in my opinion is the delivery apps masquerading under a restaurants name online, and then then charging for it. When I order online, I have no idea if i'm ordering from the restaurant directly, or if i'm ordering from some app that's registered a website under their name, and has better SEO.
centimeter 6y ago
Surely this price control won’t cause any unintuitive deadweight loss...
mchusma 6y ago
If we were going to limit profits, we should target visa/MasterCard/amex instead. They are a true oligopoly taxing the entire economy and have acted in a highly anti-trust fashion. Limiting their fees to something like 0.1% of the transaction is plenty to not lose money and would put back something like 2.8% of every transaction back into lower prices or into the businesses hands.
- ceejayoz 6y ago
  I think you're looking at that market from the wrong angle. Competition in the credit card world pushes transaction fees up, because the competition isn't over the fees, it's competition to see who can offer the best credit card rewards. Cash back, airport lounges, travel points, concierge services...
- gruez 6y ago
  The actual benefits to consumers/businesses is going to be much less than 2.8%. For one, actual interchange fees today is nowhere near 2.9% like you suggest. It's not a flat rate, and varies wildly depending on the credit card type and merchant category[1]. For instance, a supermarket might get charged around 1.5% if the customer is using a basic credit card, or 2.1% if the customer is using a top end rewards credit card. I suspect that the weighted average of interchange rate across all consumer spending is probably under 2%. Of that 2%, a big part of it is probably also being passed to consumers via cash back/rewards programs. In Europe where interchange fees are capped, their cash back/rewards program are significantly worse than the ones in US. Combining all these factors, I'd say that the total savings to businesses and customers combined is probably under 1%. [1] https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees.pdf https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...
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cpascal 6y ago
I live in Jersey City and in March the mayor instituted an executive order capping delivery commissions to 10%. The effect of this was every Uber Eats order had a $3 "Executive Order Surcharge" for deliveries in Jersey City. They just removed the surcharge after the NJ legislation/governor passed a law making the cap state-wide.
crazygringo 6y ago
There are legitimate abuses of market power. But this is not one of them. Nobody's forcing restaurants to enter these partnerships, there's competition, and delivery people still need to be paid. There are two obvious outcomes here: either food delivery apps will restrict delivery to profitable orders only (stop working for some restaurants, require higher order minimums, etc.), or they'll stay to avoid bad press but then this is essentially the city blackmailing investors to subsidize food delivery. It's one thing for COVID-19 to restrict business services, and deeply unfortunate that businesses wind up closing. It's another thing entirely to force businesses to continue operating but at a loss. If Portland or other cities believe it's a necessary public service to provide subsidized food delivery, then they ought to pay for it themselves through tax dollars. Either hire city-employed deliverypeople and make them available to restaurants, or pay GrubHub etc. to do it through a normal business contract. But capping food delivery rates to far below what they were pre-pandemic is not a fair approach.
- mindslight 6y ago
  It's amazing how many commenters have not read the article. This is not a cap on the total price of delivered food, but rather a restriction on the delivery service misrepresenting the price of the food itself. The obvious outcome is that the delivery services move their total fee into the appropriate line item labeled "Delivery Fee". Also, there is an apparent lack of competition in this space, given that restaurants end up signing contracts that allow delivery services to setup fraudulent phone numbers to capture customers that would otherwise have a direct relationship with the restaurant. Presumably the ordinance only applies during Covid times because afterwards the restaurants will regain a fair amount of bargaining power with their dine-in customers. Currently a restaurant can only see so many orders coming from a delivery service, and has no way of knowing how many of those customers would have been direct if not for the front running.
  - crazygringo 6y ago
    Huh? I don't understand what you're saying at all. This is a cap on the commission charged. The article doesn't say anything about total price or about misrepresenting prices. Where are you getting that? Why are you saying people aren't reading the article? And the fraudulent number thing is a separate issue, totally unrelated to level of competition. It's scummy but irrelevant to this particular issue. Competition exists because there are multiple mainstream food delivery services and restaurants have been delivering food on their own for decades.
diebeforei485 6y ago
The problem with showing a $10 delivery fee on top is that it drops conversion rates by a lot. But by increasing the prices of each menu item by 20% (to cover the app's cut) and having a palatable $3.99 delivery fee (so the total cost to the customer is the same), you can increase sales. Amazon and other online retailers figured this out a long time ago. Moving some of the shipping fees into the price of the product can boost sales.
quotemstr 6y ago
Price controls create shortages. They always have and always will. You can't just create by fiat the economic outcomes that you'd prefer. You have to create the conditions under which those outcomes become natural. If you want to limit monopoly pricing of food delivery services, limit monopolistic behavior by breaking up large players. Don't allow one company to dominate an industry and then arbitrarily cap its revenue to some number that feels good.
WhompingWindows 6y ago
So if you're a Portland resident and you see a fee above 10%, what do you do?
biophysboy 6y ago
One thing I've always wondered about these delivery/rideshare "experiences": why didn't they just sell the software on a subscription service? Like a shopify or slack or something. Why did they also have to replace the drivers? Aside from being suspicious labor wise, it seems like a bloated way for software engineers to start a business, especially because they don't know how labor works for taxi fleets/ restaurants across the globe. Why not just make the businesses your customers instead of the end users?
nerfhammer 6y ago
They should charge a fee based on how efficiently the restaurant gets the food to the delivery driver, because having the driver spend 20 minutes parking and waiting in line is probably why delivery is so expensive but that delivery person's wasted time doesn't otherwise cost the restaurant much. With a normal uber ride you have to walk out to the curb to meet the driver, who does not have to find somewhere to park. If they brought the orders out to the curb like when an uber arrives rather than having drivers park & wait maybe that would make delivery far less expensive.
cameldrv 6y ago
IMO this is misguided. The reason that restaurants are struggling is because they're unable to provide the value they once did, but they're still bearing a lot of the costs that used to provide it. All of these restaurants are paying rent on their dining rooms, when they're only using the kitchens. The customer experience, paid for by waiter wages and dining room rent, is now being provided by the delivery companies. The whole customer interaction, from taking the order, to processing the payment to bringing the food to the customer has been taken over by the delivery companies, and that's a huge part of the cost and the value of the meal. Restaurants can't reasonably expect the delivery companies to just eat all of their substantial costs because the Restaurant has a stranded asset that used to provide that service. Really, it should be the landlords that are taking the hit because all of that prime dining space now has the same value as some tiny cloud kitchen off a back alley.
- GordonS 6y ago
  I disagree - large cuts to delivery services were hurting restaurants long before COVID, and the predatory practices of the likes of Grubhub and DoorDash have been well documented here on HN in the past.
  - cameldrv 6y ago
    I don't doubt that restaurants are paying big fees to the delivery companies, but the delivery companies are still losing money on every order. The predatory pricing is that they're charging too little, not too much. That's how you get this pizza arbitrage stuff. Now some of the other practices of the delivery companies like setting up fake web pages for restaurants are really objectionable, but I think that what's happening now is a separate problem. Ultimately though, the problem of the pandemic is that restaurants need customers to pay for both the dining room and the delivery, and that's just too much money. If you're running a cloud kitchen, you don't expect to be able to get the same amount of money for a meal as a sit down restaurant, but the sit down restaurant is now providing the same product as the cloud kitchen.
excalibur 6y ago
IMO the apps should be forbidden from billing restaurants at all. Force them to bill delivery customers directly, keep their hands out of small businesses' pockets, and let the consumer decide how high a fee they're willing to pay for the convenience of ordering via app.
ertemplin 6y ago
Some restaurants just raise their prices to compensate for delivery fees. One extreme example is a burger restaurant in SW Seattle that charges $6.80 for a burger if you buy it in the restaurant and $12.00 if you order it on a delivery app.
valuearb 6y ago
They should have just banned food delivery services. Oh wait, they just did.
sub7 6y ago
I can't believe all the crypto hype has led us to bogus "defi" ponzis instead of a widely adopted protocol for transport and delivery that cuts out these middlemen idiots. Oh and ticketing too, venues and artists pay an absurd amount to Ticketmaster etc. Needs to stop.
mtnGoat 6y ago
Isn't the SV way to just thumb your nose at local authorities? AirBNB and Uber seem to have done well doing it... I wonder how well Portland will do with enforcing this.
hackeraccount 6y ago
Why are they only setting the price on food delivery?
mD5pPxMcS6fVWKE 6y ago
If delivery costs the same as an average Uber ride, say, $10, it makes every order under $100 unprofitable. An average food order is way below that, I think. So the math doesn't add up.
- reaperducer 6y ago
  If delivery costs the same as an average Uber ride, say, $10, it makes every order under $100 unprofitable. What you pay as an Uber passenger is not even remotely close to what Uber pays its drivers. So a $10 cost for a food delivery may not be realistic. How much an Uber trip costs Uber depends on a lot of factors, but I can tell you from experience that very often if a passenger paid $10 for a trip, the driver saw far less than $5 of it. That's why they're always angling for tips. When I drove for Uber, a very common run was from the airport to a specific large convention hotel. The trip was maybe five miles. The passengers often complained about having to pay $25-$40 or more for the short trip. As a driver, I got maybe $3.50 out of it.
  - mD5pPxMcS6fVWKE 6y ago
    What's the big difference for a driver? It's still the same time, same gas and miles put on the car. True, the food won't throw up in his car, but he should get out of the car to pick up the order, often has to wait at the counter.
tathougies 6y ago
Oh geez.... welp. Guess I can say goodbye to delivery..
thedogeye 6y ago
Price controls on food. What could go wrong?!
danlugo92 6y ago
Does this need to be a law really?
radicalidiot 6y ago
the price you pay for living in a liberal toilet bowl.
manigandham 6y ago
If the restaurants don’t want the app then why don’t they decline? Why is the government involved in setting rates? This never ends well.
jes5199 6y ago
still seems high to me
charlesdaniels 6y ago
I wonder if there would be a market for something that presented the user with a food-deliver-app type interface, but in actual fact is just interfacing with an API on the restaurant's behalf (in lieu of the restaurant having a custom delivery order page). Basically a middle man to replace restaurant's own custom ordering systems (which are often janky, and all act differently). The delivery would still be done by the restaurant's employees, but the service would handle billing the customer, building the UI, and so on. Such a service could charge a far lower fee to the restaurants, since they would not need to employ, ensure, etc. drivers. I doubt the customer would care either way, as long as the UI is just as convenient as the existing food delivery services.
- Traster 6y ago
  The problem is that you're basically creating a brand arbitrage opportunity. Big corporates are going to do their own things, premium brands are going to get courted by Uber Eats & Door Dash with special deals and cuts, so you end up with small independents who don't draw in big business - there's all sorts of screw ups both good faith and bad that are going to impact your brand, not theirs.
resters 6y ago
In my view the sales tax is at least as big a problem as the delivery fees. Delivery fees cover things like healthcare for gig workers, etc. Sales tax pays for the police who kill people.
onetimemanytime 6y ago
>>Portland approves 10% cap on fees that food delivery apps can charge restaurants Now all they have to do is force delivery apps to deliver at that price point. But since they can't do that, they'll simply skip Portland. Maybe 30% is too much, but 10% is way to little. The company, drivers etc have to share that $5 off a $50 order and a lot of that is cost (car, gas, insurance)
scarface74 6y ago
On its face, this is really a bad idea. Price caps never lead to good market outcomes in a competitive market. You end up with an imbalance where the people who are willing to pay more aren’t getting served and demand isn’t getting met and you are reducing the supply where the suppliers could have made more money. This isn’t good for either side. However, if this means that the supplier can’t charge the restaurants but can charge a higher delivery fee and it’s explicit. That seems like a win. A free market operates more efficiently when all parties have enough information.
matthewfelgate 6y ago
How about let the free market decide?
barnyfried 6y ago
unconstitutional
frankydp 6y ago
There was a word in the past for current SF technology companies that are taxing others for passage through their "lands". Robber Baron I suggest we update the Wikipedia to add "technologist" behind "industrialist" on the title.
- fennecfoxen 6y ago
  Please do not update Wikipedia in the manner you have described. The update you describe would change the Wikipedia pages in question to be ideological in nature, but Wikipedia's preferred ideology is to attempt neutrality. Such an edit would be seen mostly by Wikipedia editors, who may be somewhat sympathetic, but would nevertheless revert your changes. Wikipedia is not an effective venue to litigate whether technology companies are good or bad. Thank you for not wasting Wikipedia editors' time.
TheMagicHorsey 6y ago
How many times and places do price controls need to be tried before these idiot government functionaries realize that for any such policy there are winners and losers. Here the losers are those who cannot be profitably served under a fixed cost limit, and so who will not be given the option to pay for delivery as a result.
aahhahahaaa 6y ago
It's outrageous how these companies have taken charge over individual businesses. Some restaurants don't even know that they're listed on these delivery services and get their search results more or less hijacked by internet savvy delivery startups with infinite money. In other cases they feel as though they have no choice due to the popularity of the online ordering services, and they get into contracts they don't really understand and have their already razor-thin margins eaten into.
mas3god 6y ago
Sad to hear, people really need to learn the concept of "voting with your dollar"
golemiprague 6y ago
I don't understand why a state need to interfere with the price businesses put on a service? How is it even legal to do something like that? and why this specific service and not any other service that charge more than 10%?
kabacha 6y ago
When I found out that local delivery service here is charging around 30% fee my mind was blown. I asked my friend who owns a small restaurant how he puts up with it and he basically said he has no choice, especially during covid. This made me think I should go out more and support the local businesses more as my country opened up already. Well my favorite mexican place was actually charging 30% more for me to eat in person there so it was actually cheaper to sit at home and have food delivered, I was almost tempted to sit down there and order via the app. The whole restaurant industry is so messed up with coupons and all sorts of marketing tricks and manipulations that I just wish there was static price with single delivery fee so I could enjoy my meal and get over it without having to be constantly vigilant to not feel ripped off. I hope more places follow Portland.
pcvarmint 6y ago
Expect longer wait times for food delivery in Portland. Price caps, fee caps, rent caps, and "price gouging" bans produce shortages. [0] This is an economic fact as strong as the law of gravity. [0] https://fee.org/shows/audio/words-numbers/the-law-of-demanding-more-supplies https://fee.org/shows/audio/words-numbers/the-law-of-demandi...

502 points by Shivetya 6y ago

Seems like a solid move, given the capture of the market by the food delivery apps, and their shady business practices (like the thread from a while ago where a delivery service was making fake websites for restaurants, without their knowledge or consent). Why have this expire post COVID though?

mynameismonkey 6y ago
I believe this is a power granted by the state of emergency, when that ends, the power to mandate it ends. At that point they'd have to pursue other legislative avenues.
itsoktocry 6y ago
>Seems like a solid move Are any of these food delivery companies even making money? What will capping their fees do except make them lose even more?
- atonse 6y ago
  I'm just reading more that this business model was never going to work the way it is right now given the thin margins in restaurants and the cost of delivery drivers. With automation, it might change the economics. I think that's what everyone's betting on. I think the Ubers and all are just trying their damndest to not completely drown until driver automation reaches a certain stage. They obviously can't openly say that because there would be revolts from their drivers.
  - ghaff 6y ago
    >They obviously can't openly say that because there would be revolts from their drivers. Uber at least has been quite explicit about that. It's somewhere between delusional and what's known in the vernacular as "lying" but investors who are either naive or are cynically bought into the greater fool theory lap it up. Delivery specifically can work in dense areas but it mostly relies on local kids or family members working for peanuts and can't really pay for overpriced SV engineers or VC yachts.
- Nextgrid 6y ago
  Food delivery worked for decades when it was done by the restaurant itself so worst-case scenario we wouldn't lose much as these companies go bankrupt and we go back to restaurant-provided delivery. In fact, with all their tech and economies of scale, I'm surprised food delivery services are doing worse in terms of per-unit profitability than the low-tech restaurant-provided ones despite already charging excessive fees. I guess the reason is that the various venture capital firms poisoned their own well by subsidizing the services and competing at below-cost pricing.
  - paulgb 6y ago
    You're right, and that's why I'm genuinely confused by what's going on. Restaurant delivery used to be a healthy market that didn't need to eat up external capital. Now we have a situation where: - Restaurants say they are paying too much. - Delivery companies are losing money. - Customers are paying fees to the sites in addition to the delivery cost we used to pay. What gives? It seems these can't all be true.
    - marcinzm 6y ago
      In NYC I'm guessing most restaurants paid illegal immigrants in cash to deliver for them. Not sure about elsewhere. That lowers the cost a lot versus having a legitimate delivery business with legal workers and taxes.
    - belltaco 6y ago
      Add to that drivers complaining that they're getting exploited. But yes, all of those can be true. Paying someone for 30 to 45 minutes of their time is expensive.
      - paulgb 6y ago
        > Paying someone for 30 to 45 minutes of their time is expensive. Definitely, but this was also the case before Uber Eats et al.
        6y ago
- r0maia 6y ago
  Who should be losing money? The delivery apps or the restaurants?
  - cocoa19 6y ago
    Neither, a business that loses money is not a business.
spacephysics 6y ago
On paper it looks good, and given the players in the arena, there’s not much competition, especially since there’s a high bar of entry for new competition. Perhaps the idea behind not imposing such regulations is a free market argument, in which the most efficient price won’t be selected for, thereby not producing the optimal supply/demand. I would argue against this point that we would be assuming perfect competition, and given the anti competitive behavior of gig economy companies in this space (such as buying restaurant domain names, making fake websites with phone numbers they own to trick people into thinking they’re ordering directly) and lack of competition, this seems appropriate for now. Though the policy timeline should be extended, I don’t believe it should be indefinite. When the aforementioned issues are resolved, I’d agree with the free market side. In China, if I recall correctly, they have a food economy such that it’s cheaper to order take out, and have the food delivered, than actually cooking. We have inefficiencies In the infrastructure, less population density, and lack of competition that prevents us being in a similar boat.
- londons_explore 6y ago
  > In China, if I recall correctly, they have a food economy such that it’s cheaper to order take out, and have the food delivered, than actually cooking. Is this true? Here in London, a typical delivered meal would cost ~$20, whereas a weekly shop and cooking probably takes 5 hours/week, but costs only ~$2 per meal.
  - borkt 6y ago
    I believe so in some areas, but only because they are using kitchens/ingredients that cost less than restaurants or stores, IE located in bad areas, conditions/treatment worse for cooks, payment less for cooks, etc. Not something that should be supported but something that technology unfortunately makes possible and convenient
    - mantap 6y ago
      This is just reflective of inequality. I don't know about China specifically but in other asian countries that I know, most locals buy their ingredients at the market, and grocery stores target richer less price-conscious consumers. So it's certainly possible that the markup that the grocery store applies is greater than the cost of cooking and delivering the food, but that doesn't mean that it's cheaper than buying the ingredients at a market and cooking it yourself.
NovemberWhiskey 6y ago
... because we generally think the free market is a good idea?
JackFr 6y ago
> Why have this expire post COVID though? Because COVID has entirely transformed the economics of owning a restaurant. It might be worthwhile revisiting this in the future when eating in restaurants is available (and safe).

gjs278 6y ago

considering the food delivery apps don’t make money, I don’t see how this will help anything

jkinudsjknds 6y ago

A lot of numbers get thrown around in these discussions. Is it accurate to say that, even on the often quoted 30% fee, that the apps are running a loss? Is there any chance of running profitably with this cap? The cost for delivery is already very high relative to the price of the food. Not opposed to it personally.

Jommi 6y ago

Let's see if they roll this into their prices

falcolas 6y ago

Are any of these food delivery app services actually making profit right now, or are they just burning VC capital? A news podcast I listened to yesterday made the statement that every food delivery company is doing deliveries at a loss. This seems problematic for making delivery a viable business without forming a monopoly to get the scale required to make things profitable.

darrenoc 6y ago
Nope, they don't make any profit even when charging 30% fees. So this 10% cap will probably cause them to withdraw from the market.
- lifeisstillgood 6y ago
  If thats true, there is not a market to withdraw from ...
- iso1631 6y ago
  I've had delivery takeaways in British towns and cities for 2 decades, well before the likes of ubereats and deliveroo. Those companies do their own deliveries and manage to make enough money to not even charge more for delivery (or offer a collection discount) - although usually a minimum cost of say £20. Why can't VC companies do it that efficently?
  - falcolas 6y ago
    Honestly, those delivery companies are probably underpaying their employees for delivery. I've worked at a pizza delivery company, and including tips, I earned about $140 a day (inflation adjusted, post-taxes) for delivering pizza all over town. It was certainly not enough to provide for a long-term living, given the vehicle upkeep costs and gas.
    - atdrummond 6y ago
      If I worked that full time, I could easily afford my apartment and other expenses. (Castletown, Isle of Man.) Now, if I still lived in London? Different story. Certain restaurant types (high margin, food well suited for delivery) and locales (high population density) seem well suited for delivery. The local steak house? Probably not, for a number of reasons: - The main profit generator at many sit down venues, drinks, are unlikely to be ordered. - Impulse add-ons, especially dessert, are less likely. Even with dark pattern upsells on apps. Dining out has many minutes or hours during which additional ordering opportunities are available. Ordering out is a single discrete event. - On platforms that don’t work with the restaurant, the option of a higher margin delivery-only menu doesn’t exist. Items with low or negative margin can go out the door that otherwise wouldn’t. - Delivery services seemingly take more for merchant processing than many restaurant chains I’ve helped secure acquiring for. Likely due to much higher chargeback/fraud on digital apps than through traditional delivery or in-restaurant. This is a killer on a low margin vertical such as dining.

chvid 6y ago

In a country where tipping of 20% is the norm ... there is all of sudden a cap of 10% on what the delivery guy can make?

albntomat0 6y ago
It's a cap on what the delivery company can charge the restaurant, not including what they charge the person doing the actual order.
aroch 6y ago
That's not what this is...? It's a cap on the commissions UberEats/Doordash/whatever can charge on an order. To, hopefully, prevent the commission structure from causing places to lose money on orders ($10 order with 20% Doordash; costs the restaurant $8.50; Doordash charges $2 commission; restaurant loses $.50 on the order)
yangminded 6y ago
It caps the fee that the delivery service can take. You can still tip the delivery person as much as you like.
- ceejayoz 6y ago
  It's not even that. They can still put a $500 delivery fee on the bill, if they want. They just can't hide it in the food costs anymore, and take it out of the restaurant's cut.
fipar 6y ago
Do you believe that the full delivery app fee goes to the delivery worker?
- chvid 6y ago
  Who is the delivery worker? Is it the guy on the scooter? The app developer in the office? The marketing guy brought your attention to the take-away place and caused you to make the order? Since all these services are operating at the loss, the "delivery worker" might actually get more than the full fee.

londons_explore 6y ago

I'd like to see this rule applied only if the delivery provider insists that the menu prices be the same with or without delivery. Personally I think a provider of any 'value add' service being able to dictate the price without their service is insane.

bryanlarsen 6y ago
Is this not the case? It looks like it's a cap of 10% on what the app can charge the restaurant. It doesn't say one way or another, but I don't see any restriction on what the app can charge the consumer. The big problem isn't so much the size of these fees, the big problem is that these fees are hidden. Like you, I'd rather see a 0% cap, requiring the app to charge the customer directly.
- londons_explore 6y ago
  Some services, like Airbnb for example, specifically say a house owner is not allowed to put a different price on Airbnb Vs some other site. That means the house owner must charge bookings not via Airbnb a higher price than normal to recoup the fees paid on Airbnb bookings. That should, in my opinion, be outlawed.

andy_ppp 6y ago

So as I understand it Deliveroo and Uber eats charge 25% of the food costs, plus delivery fees on top. Uber eats I know is losing money and Deliveroo are losing a few hundred million per year on revenues of about $500m. Basically cutting the food percentage like this to 10% would imply delivery services are permanently unprofitable? Why have all these restaurants signed up if 25% is so unfair?

wilde 6y ago
They haven't. Grubhub just scrapes business listings and pretends restaurants sign up. https://www.theverge.com/2020/1/29/21113876/grubhub-seamless-fake-restaurant-listings-no-permission-postmates-doordash https://www.theverge.com/2020/1/29/21113876/grubhub-seamless...
- andy_ppp 6y ago
  So people are willing to pay over inflated prices for takeaway? That’s capitalism for you...
- SeanLuke 6y ago
  If restaurants haven't signed up, then how are they getting fees from delivery services?
  - brianlweiner 6y ago
    In at least some cases ... the prices you see on grubhub may be higher than the actual prices the restaurant is charging. E.g $17.99 vs $14.99
    - chrisseaton 6y ago
      So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved. What is everyone's problem? Why do we want to interfere with this?

lifeisstillgood 6y ago

IMO regulation should be there to protect the smaller 'people' (small family businesses, or actual people) from abuse by larger entities, or to encourage socially beneficial change (which usually tends to benefit the smaller players anyway). So this seems a win on my part.

obibring 6y ago

This is the right move - local restaurants are hurting and, sadly, the internet is a place where big corps with large budgets have leverage over passionate little guys working their butts off. For those who want to help, I built a chrome extension similar to Honey that shows a local restaurant's direct ordering website as you're about to order from that restaurant thru a third party service. If direct ordering isn't available, it will also show you if that same order is cheaper elsewhere. If you have a favorite local restaurant that accepts direct orders, please help us add them to our system by filling in this form: https://platerapp.app.link/JACVBOFUY7 https://platerapp.app.link/JACVBOFUY7 For those interested in checking out the extension, it can be downloaded here: https://platerapp.app.link/tDSD3mUTY7 https://platerapp.app.link/tDSD3mUTY7 (it doesn't collect browsing history or sell personal info or anything of the sort)

slugiscool99 6y ago
Fantastic idea! If a restaurant offers delivery themselves, it's a no brainer to order directly from them. Usually it's cheaper and faster than ordering through an app. Hope this gains traction.
- cromka 6y ago
  I dont agree on the "faster" part. Uber or Doordash manage their own delivery people and they're vastly more efficient than the restaurants' own. If you look at Yelp or Seamlesss negative reviews, you'll notice that most of them complaint about delivery service. If there's one thing that the restaurants can benefit from when using Uber or Doordash is having their reviews on those platforms based solely on the quality of food itself.
  - ajzinsbwbs 6y ago
    When I order delivery from a restaurant, an employee (maybe the owner’s kid) comes and delivers the food directly to my house when it’s done. It‘s generally faster than the app model where you need to wait for the driver to go to the restaurant to pick up the food, then come to your house while possibly stopping at other restaurants and/or houses on the way. I could see how the restaurant delivery would be worse if that particular restaurant is bad at delivering. Also, the app model does seem like it should be cheaper at scale by using the deliverer’s labor more efficiently.

discopicante 6y ago

This reminds me of Ticketmaster vs. Pearl Jam in the 90s where the band exposed that Ticketmaster takes a much bigger cut that ticket holders didn't see in addition to a small 'ticket fee' that the ticket holder did see. I remember during that time that the general consensus from music fans was that Ticketmaster was an evil and greedy company. Restaurant customers really need to change their perceptions and understanding of restaurant economics before it collapses under the current pressure – many will not return for a long time, if ever.

jiofih 6y ago
The sad thing is I don’t believe that situation has changed - if anything they take an even larger chunk, and even figured out a way to profit multiple times from the same ticket by owning the reseller platforms.
bawolff 6y ago
I dont really see why its my responsibility as a consumer to police if business deals resturants engage in are "fair". That is the resturant's job. Its part of running a business. Actually its the main part. If the deal doesn't make financial sense - then the business shouldn't make the deal. If the business cannot survive neither taking the deal nor not taking it, then the business is not viable and it should go out of business. At most i support a law requring that resturants can set different prices for uber eats than for walk in customers
- castlecrasher2 6y ago
  How would restaurants have a choice, here? As far as they know, Uber Eats/Doordash/etc are just "regular customers" but are really just scalping the restaurant's product.
  - delfinom 6y ago
    Scalping product AND funneling all the blame on their fuckups onto the restaurants. It's a american rent seekers dream gig.

Slix 6y ago

I feel super guilty ordering from food delivery apps. But I seem to have no choice if I want delivery.

giarc 6y ago
I'm in the same boat. I was even given a large gift card recently for SkiptheDishes (Canadian food delivery app) by co-workers so I'm forced to use it. I want to support local restaurants, but I'm starting to question whether my order is actually a lose for them. I read this article and actually looked up my city councillor and emailed him. I asked if council had considered this and told him I would support this type of move.
- dubcanada 6y ago
  No your order is not a loss. Just because Skipthedishes takes 30% does not mean you placing an order is losing the restaurant money.

maltelandwehr 6y ago

Next week there will be complaints that food delivery services are no longer catering to certain areas. Instead of accepting that it is just not profitable for them, journalists will label it as backslash or an act of punishment. Same thing happened in others states/cities that implemented similar rules. The winners are people living in central areas of the city with lots of restaurants. The losers are the poorer outskirts. I fully support the idea behind this rule. But this implementation has been proven to not work.

colinmhayes 6y ago
I don't understand why people in central areas of the city order delivery. There are 10 amazing restaurants within easy walking distance of me, why order delivery when I can walk for 5 minutes instead?
- switch007 6y ago
  Depression, chronic fatigue, disabilities, anxiety...?
- flerchin 6y ago
  Sick in your apt with covid for one.
- donatj 6y ago
  - There is a pandemic going on - Not everyone is physically able
- dubcanada 6y ago
  Cause people are lazy/committed to something else/working too much/sick/what ever else? They wouldn't be ordering delivery at all if they weren't. They would make their own food.
- fortran77 6y ago
  If you have enough discretionary income, why not circulate it and help expand the econony? I'd never have a problem with any of my neighbors spending money, and especially not locally.

avita1 6y ago

The cynic in me > noted that the city rule has a provision that drivers’ pay can’t be reduced because of the fee caps This seems impossible to enforce right? The city can't reasonably have any insight into why driver fees change.

airstrike 6y ago

Why does it have to be a percentage? Taking the food from point A to point B costs the same whether it's sardines or caviar. I never understood this... Seems like charging for the distance traveled and even the time of day would make a lot more sense

talideon 6y ago
It's a cap. It's not a statement of how _much_ you can charge, just what the maximum charge can be. How much you actually charge can be based on the things you mention, but you can't charge any more than that 10%. Also, a maximum %age is easier to regulate, while the factors you mention are significantly harder to regulate. Moreover, %ages don't need readjusting to account for inflation.
BurningFrog 6y ago
It's a symbolic gesture, not a reasoned policy initiative.
zild3d 6y ago
> Taking the food from point A to point B costs the same whether it's sardines or caviar orders for 1-2 people yes, but that doesn't handle large orders for parties, etc
- airstrike 6y ago
  Sure, then make it f(number_of_items, distance_traveled, time_of_day)

cocoa19 6y ago

I disagree with this move. Why should we force a cap rather than let market competition improve prices? I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant. Then I can decide if the time savings is worth that 25% or not.

_sbrk 6y ago
Indeed. Let the market discover the proper price for this service.
- _wldu 6y ago
  The market can't discover this when consumers are misled by the delivery services. 10% is reasonable. Let the delivery service add a fee to recover their cost rather than take the food provider's profit. Otherwise, these food providers are going to go out of business (and be bought by the delivery services).
  - _sbrk 6y ago
    The market determines what is reasonable, not you (or any one person). "Recover their cost"? What is this, communist Russia? So what if the food providers sell off to the delivery services? Perhaps it will result in a better match for the market demands. Preserving jobs isn't the goal of capitalism, profit is. Those businesses who try to go too far toward extreme profit usually fail when smaller, more nimble upstarts dig the foundations out from under the bigger ones.
ceejayoz 6y ago
> I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant. Isn't this what this does? It's a cap on the hidden cut these apps take from what the bill shows as the restaurant's revenue. Instead of taking 30% of my $10 pizza, Uber/Grubhub/etc. now have to decide to put that $3 in the fee they show to the user if they want that revenue.

inkaudio 6y ago

This is a regulatory response to Silicon Valley’s implementation of predatory pricing. Let me explain: Predatory pricing is defined as “the pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market.” For silicon valley startups like Doordash and Grubhub this is accomplished by acquiring customers at a significant loss in ways that may often seem idiotic. example: Doordash and Pizza Arbitrage https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852 The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%. Since predatory pricing is illegal, this response is justified. However, it would be better if regulators enforce predatory pricing rules to begin with, which they rarely ever do. for more info on predatory pricing rules in America see: https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/predatory-or-below-cost https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

MisterTea 6y ago
> The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%. You fight back by calling your order in and having them deliver it or pick it up yourself. I do this 99%* of the time as I refuse to pay a web server $8+ order+delivery fee for a meal that costs the same. It's absurd to think that people are so lazy that they cant pick up a phone or walk a few blocks/cycle/drive to get their meal. *save for the rare late night drunk+high AF Dominoes orders.
- mchanson 6y ago
  Or just regulate the dumb behavior of these dumb start ups to not distort the market in dumb damaging ways,
  - MisterTea 6y ago
    Do you need these services that badly that you're willing to get the government involved? If you don't like the product or the company ethics then don't give them money. The only lesson greed will ever learn from is No Sale.

swalsh 6y ago

This feels like capping extortion. The real problem in my opinion is the delivery apps masquerading under a restaurants name online, and then then charging for it. When I order online, I have no idea if i'm ordering from the restaurant directly, or if i'm ordering from some app that's registered a website under their name, and has better SEO.

centimeter 6y ago

Surely this price control won’t cause any unintuitive deadweight loss...

mchusma 6y ago

If we were going to limit profits, we should target visa/MasterCard/amex instead. They are a true oligopoly taxing the entire economy and have acted in a highly anti-trust fashion. Limiting their fees to something like 0.1% of the transaction is plenty to not lose money and would put back something like 2.8% of every transaction back into lower prices or into the businesses hands.

ceejayoz 6y ago
I think you're looking at that market from the wrong angle. Competition in the credit card world pushes transaction fees up, because the competition isn't over the fees, it's competition to see who can offer the best credit card rewards. Cash back, airport lounges, travel points, concierge services...
gruez 6y ago
The actual benefits to consumers/businesses is going to be much less than 2.8%. For one, actual interchange fees today is nowhere near 2.9% like you suggest. It's not a flat rate, and varies wildly depending on the credit card type and merchant category[1]. For instance, a supermarket might get charged around 1.5% if the customer is using a basic credit card, or 2.1% if the customer is using a top end rewards credit card. I suspect that the weighted average of interchange rate across all consumer spending is probably under 2%. Of that 2%, a big part of it is probably also being passed to consumers via cash back/rewards programs. In Europe where interchange fees are capped, their cash back/rewards program are significantly worse than the ones in US. Combining all these factors, I'd say that the total savings to businesses and customers combined is probably under 1%. [1] https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees.pdf https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...

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cpascal 6y ago

I live in Jersey City and in March the mayor instituted an executive order capping delivery commissions to 10%. The effect of this was every Uber Eats order had a $3 "Executive Order Surcharge" for deliveries in Jersey City. They just removed the surcharge after the NJ legislation/governor passed a law making the cap state-wide.

crazygringo 6y ago

There are legitimate abuses of market power. But this is not one of them. Nobody's forcing restaurants to enter these partnerships, there's competition, and delivery people still need to be paid. There are two obvious outcomes here: either food delivery apps will restrict delivery to profitable orders only (stop working for some restaurants, require higher order minimums, etc.), or they'll stay to avoid bad press but then this is essentially the city blackmailing investors to subsidize food delivery. It's one thing for COVID-19 to restrict business services, and deeply unfortunate that businesses wind up closing. It's another thing entirely to force businesses to continue operating but at a loss. If Portland or other cities believe it's a necessary public service to provide subsidized food delivery, then they ought to pay for it themselves through tax dollars. Either hire city-employed deliverypeople and make them available to restaurants, or pay GrubHub etc. to do it through a normal business contract. But capping food delivery rates to far below what they were pre-pandemic is not a fair approach.

mindslight 6y ago
It's amazing how many commenters have not read the article. This is not a cap on the total price of delivered food, but rather a restriction on the delivery service misrepresenting the price of the food itself. The obvious outcome is that the delivery services move their total fee into the appropriate line item labeled "Delivery Fee". Also, there is an apparent lack of competition in this space, given that restaurants end up signing contracts that allow delivery services to setup fraudulent phone numbers to capture customers that would otherwise have a direct relationship with the restaurant. Presumably the ordinance only applies during Covid times because afterwards the restaurants will regain a fair amount of bargaining power with their dine-in customers. Currently a restaurant can only see so many orders coming from a delivery service, and has no way of knowing how many of those customers would have been direct if not for the front running.
- crazygringo 6y ago
  Huh? I don't understand what you're saying at all. This is a cap on the commission charged. The article doesn't say anything about total price or about misrepresenting prices. Where are you getting that? Why are you saying people aren't reading the article? And the fraudulent number thing is a separate issue, totally unrelated to level of competition. It's scummy but irrelevant to this particular issue. Competition exists because there are multiple mainstream food delivery services and restaurants have been delivering food on their own for decades.

diebeforei485 6y ago

The problem with showing a $10 delivery fee on top is that it drops conversion rates by a lot. But by increasing the prices of each menu item by 20% (to cover the app's cut) and having a palatable $3.99 delivery fee (so the total cost to the customer is the same), you can increase sales. Amazon and other online retailers figured this out a long time ago. Moving some of the shipping fees into the price of the product can boost sales.

quotemstr 6y ago

Price controls create shortages. They always have and always will. You can't just create by fiat the economic outcomes that you'd prefer. You have to create the conditions under which those outcomes become natural. If you want to limit monopoly pricing of food delivery services, limit monopolistic behavior by breaking up large players. Don't allow one company to dominate an industry and then arbitrarily cap its revenue to some number that feels good.

WhompingWindows 6y ago

So if you're a Portland resident and you see a fee above 10%, what do you do?

biophysboy 6y ago

One thing I've always wondered about these delivery/rideshare "experiences": why didn't they just sell the software on a subscription service? Like a shopify or slack or something. Why did they also have to replace the drivers? Aside from being suspicious labor wise, it seems like a bloated way for software engineers to start a business, especially because they don't know how labor works for taxi fleets/ restaurants across the globe. Why not just make the businesses your customers instead of the end users?

nerfhammer 6y ago

They should charge a fee based on how efficiently the restaurant gets the food to the delivery driver, because having the driver spend 20 minutes parking and waiting in line is probably why delivery is so expensive but that delivery person's wasted time doesn't otherwise cost the restaurant much. With a normal uber ride you have to walk out to the curb to meet the driver, who does not have to find somewhere to park. If they brought the orders out to the curb like when an uber arrives rather than having drivers park & wait maybe that would make delivery far less expensive.

cameldrv 6y ago

IMO this is misguided. The reason that restaurants are struggling is because they're unable to provide the value they once did, but they're still bearing a lot of the costs that used to provide it. All of these restaurants are paying rent on their dining rooms, when they're only using the kitchens. The customer experience, paid for by waiter wages and dining room rent, is now being provided by the delivery companies. The whole customer interaction, from taking the order, to processing the payment to bringing the food to the customer has been taken over by the delivery companies, and that's a huge part of the cost and the value of the meal. Restaurants can't reasonably expect the delivery companies to just eat all of their substantial costs because the Restaurant has a stranded asset that used to provide that service. Really, it should be the landlords that are taking the hit because all of that prime dining space now has the same value as some tiny cloud kitchen off a back alley.

GordonS 6y ago
I disagree - large cuts to delivery services were hurting restaurants long before COVID, and the predatory practices of the likes of Grubhub and DoorDash have been well documented here on HN in the past.
- cameldrv 6y ago
  I don't doubt that restaurants are paying big fees to the delivery companies, but the delivery companies are still losing money on every order. The predatory pricing is that they're charging too little, not too much. That's how you get this pizza arbitrage stuff. Now some of the other practices of the delivery companies like setting up fake web pages for restaurants are really objectionable, but I think that what's happening now is a separate problem. Ultimately though, the problem of the pandemic is that restaurants need customers to pay for both the dining room and the delivery, and that's just too much money. If you're running a cloud kitchen, you don't expect to be able to get the same amount of money for a meal as a sit down restaurant, but the sit down restaurant is now providing the same product as the cloud kitchen.

excalibur 6y ago

IMO the apps should be forbidden from billing restaurants at all. Force them to bill delivery customers directly, keep their hands out of small businesses' pockets, and let the consumer decide how high a fee they're willing to pay for the convenience of ordering via app.

ertemplin 6y ago

Some restaurants just raise their prices to compensate for delivery fees. One extreme example is a burger restaurant in SW Seattle that charges $6.80 for a burger if you buy it in the restaurant and $12.00 if you order it on a delivery app.

valuearb 6y ago

They should have just banned food delivery services. Oh wait, they just did.

sub7 6y ago

I can't believe all the crypto hype has led us to bogus "defi" ponzis instead of a widely adopted protocol for transport and delivery that cuts out these middlemen idiots. Oh and ticketing too, venues and artists pay an absurd amount to Ticketmaster etc. Needs to stop.

mtnGoat 6y ago

Isn't the SV way to just thumb your nose at local authorities? AirBNB and Uber seem to have done well doing it... I wonder how well Portland will do with enforcing this.

hackeraccount 6y ago

Why are they only setting the price on food delivery?

mD5pPxMcS6fVWKE 6y ago

If delivery costs the same as an average Uber ride, say, $10, it makes every order under $100 unprofitable. An average food order is way below that, I think. So the math doesn't add up.

reaperducer 6y ago
If delivery costs the same as an average Uber ride, say, $10, it makes every order under $100 unprofitable. What you pay as an Uber passenger is not even remotely close to what Uber pays its drivers. So a $10 cost for a food delivery may not be realistic. How much an Uber trip costs Uber depends on a lot of factors, but I can tell you from experience that very often if a passenger paid $10 for a trip, the driver saw far less than $5 of it. That's why they're always angling for tips. When I drove for Uber, a very common run was from the airport to a specific large convention hotel. The trip was maybe five miles. The passengers often complained about having to pay $25-$40 or more for the short trip. As a driver, I got maybe $3.50 out of it.
- mD5pPxMcS6fVWKE 6y ago
  What's the big difference for a driver? It's still the same time, same gas and miles put on the car. True, the food won't throw up in his car, but he should get out of the car to pick up the order, often has to wait at the counter.

tathougies 6y ago

Oh geez.... welp. Guess I can say goodbye to delivery..

thedogeye 6y ago

Price controls on food. What could go wrong?!

danlugo92 6y ago

Does this need to be a law really?

radicalidiot 6y ago

the price you pay for living in a liberal toilet bowl.

manigandham 6y ago

If the restaurants don’t want the app then why don’t they decline? Why is the government involved in setting rates? This never ends well.

jes5199 6y ago

still seems high to me

charlesdaniels 6y ago

I wonder if there would be a market for something that presented the user with a food-deliver-app type interface, but in actual fact is just interfacing with an API on the restaurant's behalf (in lieu of the restaurant having a custom delivery order page). Basically a middle man to replace restaurant's own custom ordering systems (which are often janky, and all act differently). The delivery would still be done by the restaurant's employees, but the service would handle billing the customer, building the UI, and so on. Such a service could charge a far lower fee to the restaurants, since they would not need to employ, ensure, etc. drivers. I doubt the customer would care either way, as long as the UI is just as convenient as the existing food delivery services.

Traster 6y ago
The problem is that you're basically creating a brand arbitrage opportunity. Big corporates are going to do their own things, premium brands are going to get courted by Uber Eats & Door Dash with special deals and cuts, so you end up with small independents who don't draw in big business - there's all sorts of screw ups both good faith and bad that are going to impact your brand, not theirs.

resters 6y ago

In my view the sales tax is at least as big a problem as the delivery fees. Delivery fees cover things like healthcare for gig workers, etc. Sales tax pays for the police who kill people.

onetimemanytime 6y ago

>>Portland approves 10% cap on fees that food delivery apps can charge restaurants Now all they have to do is force delivery apps to deliver at that price point. But since they can't do that, they'll simply skip Portland. Maybe 30% is too much, but 10% is way to little. The company, drivers etc have to share that $5 off a $50 order and a lot of that is cost (car, gas, insurance)

scarface74 6y ago

On its face, this is really a bad idea. Price caps never lead to good market outcomes in a competitive market. You end up with an imbalance where the people who are willing to pay more aren’t getting served and demand isn’t getting met and you are reducing the supply where the suppliers could have made more money. This isn’t good for either side. However, if this means that the supplier can’t charge the restaurants but can charge a higher delivery fee and it’s explicit. That seems like a win. A free market operates more efficiently when all parties have enough information.

matthewfelgate 6y ago

How about let the free market decide?

barnyfried 6y ago

unconstitutional

frankydp 6y ago

There was a word in the past for current SF technology companies that are taxing others for passage through their "lands". Robber Baron I suggest we update the Wikipedia to add "technologist" behind "industrialist" on the title.

fennecfoxen 6y ago
Please do not update Wikipedia in the manner you have described. The update you describe would change the Wikipedia pages in question to be ideological in nature, but Wikipedia's preferred ideology is to attempt neutrality. Such an edit would be seen mostly by Wikipedia editors, who may be somewhat sympathetic, but would nevertheless revert your changes. Wikipedia is not an effective venue to litigate whether technology companies are good or bad. Thank you for not wasting Wikipedia editors' time.

TheMagicHorsey 6y ago

How many times and places do price controls need to be tried before these idiot government functionaries realize that for any such policy there are winners and losers. Here the losers are those who cannot be profitably served under a fixed cost limit, and so who will not be given the option to pay for delivery as a result.

aahhahahaaa 6y ago

It's outrageous how these companies have taken charge over individual businesses. Some restaurants don't even know that they're listed on these delivery services and get their search results more or less hijacked by internet savvy delivery startups with infinite money. In other cases they feel as though they have no choice due to the popularity of the online ordering services, and they get into contracts they don't really understand and have their already razor-thin margins eaten into.

mas3god 6y ago

Sad to hear, people really need to learn the concept of "voting with your dollar"

golemiprague 6y ago

I don't understand why a state need to interfere with the price businesses put on a service? How is it even legal to do something like that? and why this specific service and not any other service that charge more than 10%?

kabacha 6y ago

When I found out that local delivery service here is charging around 30% fee my mind was blown. I asked my friend who owns a small restaurant how he puts up with it and he basically said he has no choice, especially during covid. This made me think I should go out more and support the local businesses more as my country opened up already. Well my favorite mexican place was actually charging 30% more for me to eat in person there so it was actually cheaper to sit at home and have food delivered, I was almost tempted to sit down there and order via the app. The whole restaurant industry is so messed up with coupons and all sorts of marketing tricks and manipulations that I just wish there was static price with single delivery fee so I could enjoy my meal and get over it without having to be constantly vigilant to not feel ripped off. I hope more places follow Portland.

pcvarmint 6y ago

Expect longer wait times for food delivery in Portland. Price caps, fee caps, rent caps, and "price gouging" bans produce shortages. [0] This is an economic fact as strong as the law of gravity. [0] https://fee.org/shows/audio/words-numbers/the-law-of-demanding-more-supplies https://fee.org/shows/audio/words-numbers/the-law-of-demandi...