City Council approves changes to food delivery fees paid by restaurants

City Council overwhelmingly approved changes to service fees charged by food delivery companies, which were capped temporarily in 2020 to help restaurants cope with the pandemic-related economic downtown.

The bill is now headed to Mayor Jim Kenney, who officials have said is considering it. In its testimony, the administration had supported the general intention.

Under the bill, the 15% cap will remain, but restaurants can opt for a higher level of fees in exchange for additional services from delivery companies such as DoorDash, Grubhub and UberEats. The plan, presented by board member Cherelle L. Parker, was approved, 16-1, with opposition from David Oh.

A rep for Oh said a temporary cap was “the right thing to do. However, permanently restricting what a company can charge its customer seems like an unnecessary and potentially illegal excess on the part of the municipal government.

Since July 2020, the city has capped restaurant service charges at 15% — 10% for delivery and 5% for marketing — during what the city calls a “declaration of extraordinary circumstances” and for 90 days afterward. Total charges were previously 20% to 40% – a figure restaurateurs have said is too high, given restaurants’ traditionally low profit margins, typically in the single digits.

In March 2020, the pandemic sent the public to mass delivery apps, changing the way many restaurants do business. Parker asked the Pennsylvania Restaurant and Lodging Association, which represents 350 restaurants in the city and nearly 4,000 statewide, to meet with delivery service representatives to help change the temporary law.

Permanent fee caps instituted by other major cities, including New York, have ended up in court. Delivery services have said permanent price controls are unconstitutional and would increase costs for consumers.

Some restaurants are offering delivery and encouraging customers to bypass apps entirely by calling restaurants directly or opting for pickup.