Minneapolis imposes permanent caps on third-party food delivery fees

As pandemic emergency regulations soon expire, the Minneapolis City Council voted last week to make permanent a cap on commission fees charged to restaurants by food delivery companies such as Uber Eats, Grubhub, DoorDash and Bite Squad.

The order, which was drafted by Council Member Lisa Goodman, limits fees to 15% or less and also prohibits delivery companies from charging higher fees for additional services, such as advertising or placing orders. , without the consent of the restaurants.

“This is really an attempt to help small independent restaurants in Minneapolis survive,” said Goodman, who represents the Seventh Ward, which includes much of downtown and part of Uptown, which has many restaurants. “Since there is already an emergency regulation in place, it is only extending the emergency regulation, so nothing will change for the consumer.”

In December 2020, the city imposed a fee cap for the first time to help restaurants hit hard by the COVID-19 pandemic stay afloat. That emergency ordinance is set to expire in February, and city officials said there is an urgent need to make the caps — which have become commonplace in many cities across the country — permanent as restaurants and customers continue to rely heavily on third-party food delivery apps.

Restaurant owners and businesses supporting the order said the caps have allowed them to hire and pay more staff. Some smaller restaurants have raised concerns that once the emergency order is lifted, companies will revert to charging them 30% for services, preventing them from making a profit.

“The ceiling [delivery companies] levels the playing field… Everyone has to play by the same rules,” said Sam Turner, owner of the Nicollet Diner and Muffin Top Cafe in Minneapolis, who asked the board to make fee caps permanent. “It will certainly go a long way to help small independent operators.”

Food delivery companies and domestic lobbyists are responding, saying price controls can raise prices for consumers, which in turn can reduce orders for restaurants and reduce revenue opportunities for drivers. Uber Technology and its food delivery service app Uber Eats said in a letter to the city council that the permanent regulations “would make it difficult, if not impossible” for them to do business in Minneapolis.

In a statement to the Star Tribune, DoorDash called the order interference “harmful to local economies” and a violation of the constitutions of the United States and Minnesota. DoorDash is among the top food delivery companies that have sued New York and San Francisco for making pandemic fee regulations permanent.

“These checks will likely hurt customers, delivery drivers and restaurant politicians they hope to support,” company spokeswoman Briana Megid said.