Delivery apps DoorDash and Grubhub sue San Francisco for ongoing fee cap
In June, San Francisco had the distinction of being the first city in the country to impose a permanent cap on delivery costs. Many cities have temporary emergency measures in place during the pandemic, but SF was the first to approve permanent legislation requiring DoorDash, Grubhub, and other food delivery apps to cap restaurant fees at $ 15. %, long after the end of the pandemic. Now, as expected, the apps are fighting back: DoorDash and Grubhub filed a lawsuit on Friday, July 16 against the city and county of San Francisco, first reported by Catering company.
In the lawsuit, DoorDash and Grubhub argue that “imposing permanent price controls” is unnecessary, harmful and unconstitutional. As in the past, the companies argued that the cap would hurt restaurants and threatened to pass the costs on to consumers, which they have already done with additional fees. DoorDash is headquartered in SF and also owns Caviar, while Grubhub is based in Chicago. DoorDash and Grubhub have both published corporate blog posts, and DoorDash even designed a multimedia infographic, which appears to be aimed at educating customers about “price control” or “price fixing,” which is the message. that businesses are currently using.
“The city of San Francisco has adopted hasty, damaging and unconstitutional price controls that leave us with no choice but to resolve this matter in court,” a DoorDash spokesperson said in a statement. “The permanent price controls not only violate the US and California constitutions, but they’re likely to hurt the very restaurants the city claims to support. The imposition of permanent price controls is an unprecedented and dangerous overshoot on the part of the government and will limit the options on which small businesses can rely to compete in an increasingly competitive market.
The lawsuit mentions that the Mayor of London Breed, who originally proposed the temporary emergency order, refused to sign the permanent order, at least not until some final amendments were resolved to address concerns. Talk with the SF Chronicle, however, Supervisor Ahsha Safai and a spokesperson for Supervisor Aaron Peskin, both of whom co-sponsored the legislation, said they supported the ordinance and expected the city to be able to successfully defend this new trial.
Local restaurants were relieved when the permanent cap was approved, but now, “We are disappointed to learn of the delivery company’s ongoing lawsuit against the city of San Francisco’s delivery cap legislation,” said GGRA’s Laurie Thomas said in a statement. The GGRA has been in communication with DoorDash in particular, and was even surprisingly supportive when DoorDash introduced new pricing levels in April. These levels start with a base plan at 15%, but promise more marketing and better promotion in the app at levels 25 or 30% higher; this leaves open the question of whether the basic plan is actually viable for restaurants, or if owners would be pressured and sold. DoorDash now says the majority of restaurants have voluntarily opted for these higher levels.
In a story common to many SF restaurants, Beit Rima’s Samir Mogannam says he “boycotted” and refused to partner with delivery apps before the pandemic, due to the steep cuts they demanded at 25 or 30 percent, and their aggressive outreach through Phone calls. He says he only signed with DoorDash and Caviar during the worst of the pandemic, in a last ditch effort to save his ailing business, when after a month of “bitter conversations” he was able to negotiate them until at 10%. “I never wanted to make the delivery in the first place,” says Mogannam. “I didn’t like the way they exploited their workers and cheated restaurants.”
He says he was grateful that the city of San Francisco was able to put in place a permanent cap, so that his fellow restaurateurs, who might not carry as much weight as the hugely popular Beit Rima, could secure a deal. equally fair. “I think SF as a city has a right to protect the small businesses from the big businesses that bully and defraud them,” Mogannam said. Weighing in on the ongoing lawsuit, “It’s in the best interest of delivery apps to fall back. If they really want partnerships that will continue instead of closing restaurants. It’s just another case of greed.