California may let restaurants set prices on delivery platforms

A California bill is attempting to allow restaurants in the state to set menu prices on delivery platforms.

San Diego Assemblywoman Lorena Gonzalez’s AB 286 would allow restaurants to set the price of food and drink sold through delivery aggregators. It would also require food delivery companies to provide customers and restaurants with itemized cost breakdowns of third-party fees and commissions charged on each transaction. 

Gonzalez argues restaurant delivery transactions “obscure how much money is actually going to individual restaurants,” making it challenging for diners to know how best to support local eateries.

“We’ve seen reports of restaurant owners losing money on food delivery app orders because of hidden fees from companies like DoorDash, UberEats, and GrubHub,” Gonzalez said in a press release. “AB 286 is about providing much-needed transparency so restaurants and customers know exactly what they’re being charged upfront, and gives restaurant owners the choice to share with their customers how much from the transaction is actually going to their business.”

AB 286 would also protect delivery couriers from tip theft through this cost transparency, according to the release. The bill would ensure these workers are entitled to the full amount of tips and gratuities after completing a delivery. 

The proposed legislation comes as consumer, restaurant, and government pushback against third-party delivery platforms grows south of the border.

Earlier this week, Chicago sued Grubhub and DoorDash, claiming their business practices are unfair and “harm restaurants and mislead consumers.”

A changing climate

In Canada and the U.S., the pandemic has prompted a widespread review of the culture and operations of third-party delivery platforms, not least the fees they charge.

In one particularly notable case in Quebec, Montreal restaurant Deli Boyz launched a class-action lawsuit against food delivery companies for continuing to charge allegedly “exorbitant and abusive” commissions during the pandemic.

In response, provinces including Ontario, B.C., and Quebec introduced temporary commission caps to help struggling restaurants, and there have been calls to make those measures permanent beyond the pandemic. In the U.S., San Francisco and New York City have both passed permanent legislation to this end.

RELATED: Governments must work with restaurants on no-fee delivery app

Meanwhile, in B.C., Canadian delivery giant SkipTheDishes made headlines earlier in 2021 by introducing a controversial new $0.99 surcharge on orders in the province in response to the government’s cap.

Some steps have been taken by delivery companies. In the U.S., DoorDash unveiled a new three-tier pricing structure that offers its local American restaurant partners more choice and flexibility in the package they choose and the consequential fees they pay.

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