Santa Clara County rushes to place cap on food-delivery fees
With on-site dining no longer an option, restaurants rely heavily on food-delivery companies. Photo courtesy of Federal Realty Investment Trust.

Santa Clara County could see a 15% cap on food-delivery fees as soon as next week.

While supervisors were planning to look into the matter and put a cap in place in January, they instead voted unanimously Dec. 8 to draft a stop gap measure they could approve Dec. 15.

“Many of our restaurant members just spent the last remaining cash reserves they had on what we’re calling ‘winterization’ tents and canopies that are rendered basically unusable under this new order,” Nate LeBlanc, business development manager for the San Jose Downtown Association, said in reference to the new stay-at-home order issued by the county last week.

“This move will allow them to weather this long dark winter we’re about to have from a financial standpoint. Our members can live with an up to 15% cap, not the 30% fees that we’re seeing,” he said.

LeBlanc told supervisors waiting until January to cap delivery fees would be too late.

“These restaurants need help now,” LeBlanc said.

Supervisors indicated they want to make the cap countywide, not just applicable in unincorporated areas. Supervisors notably wielded their countywide jurisdiction earlier this year with implementing eviction moratoriums, calling the move an emergency.

Because both indoor and outdoor dining are prohibited in Santa Clara County through next year, many restaurants will have to rely on delivery services to stay in business. The cap would target third-party apps including DoorDash, Uber Eats and Grubhub that commonly collect up to 30% on each order.

According to third-party delivery company websites, commissions and fees are used to cover the costs for everything from delivery and marketing to business listings and credit card processing.

But county staff and supervisors say the companies also charge customers additional fees on the other end, with little transparency about what they are for.

The county-wide ordinance will likely try to ensure third-party delivery drivers will not have their tips or wages garnished or withheld by the parent companies, as well as increase fee transparency.

Mullissa Willette, first vice president of Service Employees International Union 521, said she supports the cap.

“As a gig worker myself, it’s really difficult to plan ahead and budget,” Willette said. “These workers are being called essential workers to their faces, on signs, in commercials, but in reality they are being exploited unlawfully and we need to hold these gig tech companies accountable.”

Supervisor Mike Wasserman was enthusiastic to support the cap.

“I was astounded when I talked to restaurant owners about the costs that they incur for deliveries. That simply makes it profit-prohibitive to do delivery,” Wasserman said. “This is absolutely needed right now as soon as possible, and I’m fully supportive of whatever we need to make it happen.”

If supervisors adopt the cap, it will likely be based on what other local municipalities, such as the city of Santa Clara, have passed.

Following the stop-gap measure, county staff will draft an ordinance that is specific to research in Santa Clara County.

DoorDash said the cap would likely end up hurting customers and restaurants.

“Pricing regulations could cause us to increase costs for customers, which could lead to fewer orders for local restaurants and fewer earning opportunities for Dashers,” DoorDash spokesperson Campbell Matthews said.

Representatives of food delivery companies including Postmates, UberEats and Grubhub did not respond to requests for comment.

Contact Madelyn Reese at [email protected] and follow her @MadelynGReese.

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