Ann Arbor officials are trying to enact an emergency ordinance to cap food delivery fees

ANN ARBOR, MI – Ann Arbor officials plan to vote on a temporary emergency order on Monday to cap fees for third party food delivery.

It would discourage services like Uber Eats, DoorDash, GrubHub, and Postmates from charging restaurants a commission or delivery fee greater than 15% of the price of a customer’s food order, unless the restaurant agrees to a higher fee in exchange for additional services like advertising too. Marketing or access to customer subscription programs.

Violations of the regulation would face fines of up to $ 500 per violation.

During the COVID-19 pandemic, restaurants and customers are heavily reliant on third-party delivery services. However, according to official figures, Ann Arbor restaurants, which are already struggling due to government operating restrictions, have been charged delivery fees in excess of 30%.

“Such fees jeopardize the financial viability of many Ann Arbor restaurants and the jobs those restaurants provide in the public health emergency during the COVID-19 emergency,” the prosecutor said in a memo to the city council.

“Some restaurants in Ann Arbor have already closed due to a drop in sales due to the pandemic,” the memo said. “The proposed Emergency Ordinance will help support the viability of Ann Arbor restaurants during the pandemic and will have a direct and positive impact on the general well-being of city customers, restaurants and their employees.”

The proposed Emergency Ordinance is on the city council’s agenda on May 3rd and is sponsored by Mayor Christopher Taylor, Julie Grand, Lisa Disch and Travis Radina.

Officials point to similar caps on third-party delivery charges in other cities across the country.

Grand, D-3rd Ward, said she started investigating the idea of ​​a fee cap after hearing from Phil Clark, general manager of Rays Red Hots restaurant at her station. Clark sent her an email in February titled “A Serious Problem That is Crippling Local Restaurants and Bringing Many of Us Out of Business”, arguing that the third-party companies are “benefiting from the pandemic on the back of small businesses.”

“Restaurants like us pay 25% to 35% commission for every single order we receive through these channels, on top of the exorbitant fees and costs that the customer is billed at the same time,” wrote Clark. “Month after month, we continue to pay these huge multinational corporations a shocking $ 12,000 to $ 20,000 of our hard-earned and much-needed revenues. We have no other option to do business with our customers in downtown Ann Arbor in the age of COVID, with no parking space and no logistical capacity to operate our own fleet of drivers. “

Clark added that his employees “never see a dime tip on those orders and our business is trying to survive on 30% less sales, on top of the overall decline in sales due to the pandemic + repeated restaurant and campus closings, etc.”

Based on events elsewhere where fee caps have been introduced, Grand said the regulation could only result in third-party delivery services charging an additional $ 1 customer fee, but she is happy with that tradeoff.

Third-party delivery services have also posted inaccurate or misleading Ann Arbor restaurant menus on their online platforms, and outdated menus with incorrect items or prices can lead to customer dissatisfaction with restaurants, the law firm told the council in a memo.

The proposed regulation would make it illegal for a third party vendor to post inaccurate or misleading information about Ann Arbor restaurants or their menus.

If approved on Monday evening, the emergency ordinance would come into force immediately.

It would go under if the state finally lifts COVID-19 restrictions on restaurants, which currently include a 50% indoor seating limit, social distancing requirements, and a requirement to close indoor dining areas by 11 p.m.


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