Denver restaurants may catch a break if it’s up to Denver City Councilwoman Kendra Black.
Black is pushing forward a proposal that would cap commission fees for third-party food delivery companies, such as Uber Eats and GrubHub, to lighten the load felt by local restaurant owners, who are barely scraping by because of the pandemic.
“Restaurants are a really important part of our culture, our neighborhoods and our economy. And as we know, they're really suffering today with decreased capacity, fewer people going out, and cold weather on the way,” Black said Wednesday to council’s Finance and Governance Committee.
To help offset the drop in dine-in service, third-party delivery platforms can offer a lifeline, but one that’s “imperfect,” Black said. That's because in many cases the commission fees can soar as high as 35% on an order.
Some restaurants, particularly chains and national chains, are able to negotiate a better deal , she said, “so it’s really the little guys who are paying the highest rate, and it does really hurt them.”
“After running the numbers of these services, it makes little economic sense to continue with third-party delivery services,” Lorena Cantarovici, owner of Maria Empanada, said in a statement. “The top-line revenue looks good but at the end of the day, the fees make it unprofitable. A reduction in the fee percentage would go a long way in continuing these third-party delivery services so we can bank some profits and continue to strengthen our business.”
Black’s proposal would cap commission fees at 15%, on par with legislation passed elsewhere, including Chicago, New York City, Seattle, Washington, D.C., and more. Her bill also would ensure that 100% of the tips go to the driver, and that delivery companies be barred from tacking on extra processing or service fees.
The initiative is backed by the Colorado Restaurant Association, the city’s coronavirus-era Economic Relief and Recovery Council, Eat Denver and others.
Black also met with representatives from GrubHub, Uber Eats, DoorDash and Postmates.
"I wouldn't say they were enthusiastic about this, but they were accepting of it," she said.
In a statement, Uber Eats said that “regulating the commissions that fund our marketplace forces us to radically alter the way we do business and ultimately hurt those that we’re trying to help the most: customers, small businesses and delivery people.”
Finding a balance between ensuring commission fees aren’t hurting small businesses and being careful to not drive valuable delivery services out of Denver is critical, Councilwoman Amanda Sawyer said after Black presented her proposal.
Black said the proposal strikes a balance because it would only last four months, through February, at which point the City Council could decide whether to extend it.
She’s hopeful, however, that the body won’t need to take up the contract again because of new delivery models that are emerging, including Toast TakeOut and ChowNow, which don’t charge commission.
Councilwoman At-Large Robin Kniech thanked Black for her leadership on the proposal and stressed its importance in the community.
She also plugged a reminder for residents watching the meeting:
“Check with restaurants first and see if they do their own delivery. By doing that, probably at least half the meals I’ve ordered out I’ve learned that the restaurant I’m calling has their own delivery,” she said. “It’s always best to check there first before even using this service, because 15% is still steep.”
Black's proposal was advanced out of committee on Wednesday and heads for a first reading on the floor of City Council on Sept. 28. A final vote is scheduled for Oct. 5.