The government of British Columbia yesterday placed caps on how much Food Delivery organizations can charge for their services, following the lead of Ontario and U.S. Cities such as New York, Los Angeles and San Francisco. Restaurant operators say it’s about time. Their sales are up but costs are, too…
Resto operator runs the numbers to see what her profit will be on this STD-delivered order…
Did you know that every time you order online for delivery from a local or chain restaurant, the delivery company – be it UBER EATS, DOOR DASH or Skip The Dishes – charges a fee usually calculated as a percentage of your total bill? This is a fee you never see, charged directly to the restaurant. And this fee can be as steep as 30 or even 40 percent, depending on the service and the market.
Until recently, there has been no regulation on these fees and delivery services have been making a killing as large numbers of resto customers take advantage of delivery services to help preserve their personal anti-COVID-19 isolation bubbles.
A lose-lose for resto operators
But restaurant operators say they’ve been caught between the proverbial rock and hard place. On one hand, they have to embrace the delivery services or lose out to the competition. In times like these, when they aren’t allowed to open their dining rooms, that can mean the difference between making a little profit or none at all. But some resto bosses say the charges are keeping them on the verge of failing, and the stress is tremendous.
Kelly Gordon, President of BC region sit-down Burger chain Romer’s says that 50 per cent of his revenues are currently coming from takeout. A cap reducing service charges from 30 percent to 20 means that revenues go up 10 percent – an amount he says ‘isn’t insignificant’.
BC Minister of Public Safety and Solicitor-General Mike Farnworth told reporters that local restaurants play a vital role in communities and have experienced a significant decline in sales and traffic due to the pandemic. “Capping food-service delivery fees is another way our government is providing immediate relief to our local businesses to ensure they can focus on retaining staff and keeping their business running.”
Delivery services not so happy…
Delivery service operators, on the other hand, resent having their golden goose cooked.
“Pricing regulations like those announced today could cause the company to increase costs for customers,” Door Dash said in a written response to the fee cap announcement. It also warned that the move, “may lead to fewer orders for local restaurants and fewer earning opportunities for local drivers.”
Nevertheless, “We remain focused on working with Minister Mike Farnworth’s office on solutions that better support restaurants, customers and dashers (drivers),” Door Dash insisted.
Long-range consequences
The BC delivery service cap is a temporary measure, Farnworth stressed, and will last only for three months after the newly reinforced lock down measures are lifted. He predicted that that it would be at least next summer before life in the province gets anywhere near back to normal, regardless of how fast the new COVID-19 vaccines are deployed.
My take
Maybe, now, the delivery guys will get more competitive in their marketing practices to try to squeeze a larger share of the available delivery market. Maybe, now, Resto operators will be able to do more creative marketing promos offering free delivery now and then. Maybe delivery drivers and bicyclists will be more motivated: the BC bill also makes it illegal for resto operators to withhold their tips, which are currently being charged up on the credit card/debit card bills and not provided to deliverers in cash due to no-contact procedures…
~ Maggie J.