Are Delivery Fee Caps Here to Stay?
How Delivery Fee Caps Came to Be
During the pandemic, online orders surged. After local restaurants closed dine-in seating, they had to find socially distant alternatives to avoid going into the red. Meanwhile customers grew used to ordering delivery straight to their door. It was one of the few safe, convenient and legal options besides cooking, which many were too busy to do with a newly-full house to manage. Thus the online ordering industry thrived—and so did third party apps.
Restaurants needed a fast way to adapt when the world changed overnight. So a lot of them turned to outside platforms, like Postmates or Deliveroo, to accommodate new customer expectations as soon as possible. Yet restaurants eventually learned the drawbacks to this partnership: High commission fees that they fought back against.
As a result, many states instituted temporary laws aimed at restricting third party commissions. These laws were just meant to help small businesses during the pandemic and expire in a year or so. Yet restaurants saw their effectiveness, and banded together to stop these caps from ending. Some major cities heard their cries and decided to listen.
SF and NYC Change the Game
Two major U.S. cities, San Francisco and New York, recently made these delivery fee caps permanent. Others are also extending theirs: Chicago just lengthened their 15% cap, as did Massachusetts for another two years. These forward-thinking cities are looking at how these protections have contributed to restaurant recovery thus far. Especially as states bring back mask mandates and business closures, more places will likely extend their delivery fee caps whether it’s for a few years or forever.
Delivery apps are against these limits, saying it will make it harder to provide their services and simultaneously bring up prices for customers. In San Francisco, where delivery fee caps were initially set to expire in August, DoorDash and Grubhub are suing the first city to make the imposed limitations permanent. Despite the battle that’s ensued, you’ll likely see more and more places following San Francisco and New York City’s lead in the interest of helping more small businesses through COVID-19.
How to Avoid Delivery Fee Caps Altogether
To make the pandemic situation even more complex, a labor shortage has gripped the restaurant industry. They can’t handle additional fees when they’re trying to get back to full service. It’s not sustainable. Some restaurants searched for other ways to deliver, avoiding third parties and commissions altogether. For many, technology can fill that need.
Take orderOS for example. We build a personalized app for merchants who sign up. It comes with no commissions and optimized for mobile so customers can easily order then pay. Between self-service, improved communication and the on-the-go nature of an app, your restaurant can start taking delivery orders immediately—and keep all the profit. Don’t just survive; grow and thrive with better restaurant technology.
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