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Struggling restaurants push for legislation on insurance claims, delivery fees

With federal relief funds drained, they’re seeking urgent assistance.

Amanda Fraedas, a food delivery gig worker, carried an order out of El Jefe's Taqueria in Cambridge on Thursday.Blake Nissen for The Boston Globe

While hard-hit industries have seen some relief in the public policy response to COVID-19, Boston’s restaurants are still floundering ― and they say they’re in need of their own bailout of sorts.

The $349 billion federal relief program for small businesses has been drained as of Thursday. Many restaurateurs say the program was designed to help businesses keep operating through the downturn, not navigate a total shutdown. They argue that they have different needs than others affected by the crisis, because their core business ― serving sit-down customers ― has been completely halted. So, restaurateurs have been pushing for policy changes at the state and local levels that they say will help them survive the social distancing measures that have obliterated their businesses.


A bill pending in the Massachusetts Senate would compel insurers to pay out insurance claims for the loss of business associated with the pandemic. Efforts are also underway to cap the fees being charged by delivery services like UberEats and GrubHub, which cut into the already small revenues that restaurants are seeing.

John Schall, owner of El Jefe’s Taqueria, said delivery commissions have risen from 8 percent of the restaurant's costs in February to 16 percent now. Blake Nissen for The Boston Globe

“Last week Governor Baker gave $800 million to the hospitals because of their loss of revenue,” said Jody Adams, owner of Trade, Porto, and chain of Saloniki restaurants. “We need some kind of legislation to take care of restaurants and small businesses."

With restaurants already forced to lay off or furlough staff, the past few weeks have amounted to pandemic whack-a-mole ― figuring out how to pay rent and honor vendor contracts, while wondering whether takeout orders will be enough to help weather the shutdown.

Adams and a cohort of local restaurant owners have formed a group called Massachusetts Restaurants United, which will advocate for relief measures on Beacon Hill. They say that while many state lawmakers assume that restaurants will be able to tap into the federal CARES Act to help recoup losses, those federal programs weren’t designed with restaurants in mind.


Andy Husbands, who opened three Smoke Shack BBQ restaurants in the past three years, said he’s already millions of dollars in debt. There’s so much uncertainty around the immediate and long-term future for dining that the prospect of having to abide by even the generous terms of federal loans seemed like “a really scary thing.”

And now those aren’t even available anymore.

Like many others others in the industry, Husbands has filed a “business interruption” claim with his insurer, reasoning that his business has been shut down because of a crisis that was outside of his control. And like many others, his claim was denied.

Fernanda Tapia, the owner of Comedor restaurant in Newton, has had her insurance claims rejected as well.

“I’ve been paying for insurance for years, and now that I really need it they’re saying no,” she said. “If I’m able to reopen — and there’s a good chance I can’t — I will have to order all new inventory and pay my staff just to prep everything for a week. On top of that I have $40,000 of accounts payables and two months of rent."

Business interruption insurance policies cover incidents like fires, floods, and other disasters that affect businesses. But insurers generally aren’t paying out for losses related to COVID-19, because policies usually require physical property damage to justify a claim ― and many have specific exclusions for viruses.


State Senator Jamie Eldridge is pushing a bill on Beacon Hill that would require insurers to cover their clients’ losses from the pandemic.

“I don’t think the federal government is ever going to be able to address all of the financial needs that states have,” he said. “I’d like to see the Massachusetts state government do some form of emergency relief or support for small businesses, but so far it’s been fairly modest.”

He said the bill “could be a real source of relief" for small businesses.

Under Eldridge’s proposal, insurers would pay out business interruption claims related to the shutdown, and then later be reimbursed by the state using an emergency fund created for the purpose.

The Massachusetts bill has 60 cosponsors, and it’s one of several similar bills that have been filed in states across the country, including New Jersey, Ohio, Louisiana, South Carolina, and Pennsylvania.

And a group of high-profile restaurant owners have helped highlight the issue, with several filing lawsuits against their insurance providers. Chefs Thomas Keller, Daniel Boulud, and Wolfgang Puck are members of the Business Interruption Group that is now pushing for federal subsidies for restaurants.

The group has spoken with President Trump, who signaled his support for efforts during a press conference last week, saying he “would like to see the insurance companies pay if they need to pay.”

Josh Bowman, an attorney who helped to draft the Massachusetts bill, said insurance companies are uniquely positioned to pay out claims quickly.


He said insurers are denying the claims “even while they have fewer casualties, slip and falls, and fires because the restaurants are closed.”

But such efforts are likely to face stiff opposition from insurers, who say the language of their policies is clear.

David Sampson, president and CEO of the American Property Casualty Insurance Association, said the bill in Massachusetts “threatens the stability of the sector, to the detriment of all policyholders.”

“This bill could compromise the financial ability of insurers to meet their existing promises and could have dramatic negative repercussions for all Massachusetts families, individuals, motorists, and businesses,” Sampson wrote in an e-mail.

Meanwhile, restaurateurs are also looking for local government help to push back against online delivery services such as Grubhub, Uber Eats, and DoorDash, which are now handling most of their business ― but also taking big cuts of the revenue from the transactions they process.

In some cases, these services take as much as 30 percent of a sale, and restaurants say they have no choice but to eat those costs because the delivery providers ― who typically hire gig drivers to pick up and deliver food ― encourage them to charge the same prices online as they do in the store.

City council members in Boston and Cambridge now say they’re looking at capping the commissions that delivery services can charge. San Francisco recently made a similar move, and New York City is considering such measures.


In Boston, City Councilor Ed Flynn said he plans to introduce a bill in coming weeks to cap the fees. In Cambridge, Councilor Patty Nolan said she is proposing a measure to cap commissions at 10 percent.

“At this difficult time, we want to make sure restaurants can succeed and people can get deliveries to their houses, of food from these restaurants," Flynn said. "They play a critical role during this pandemic.”

Some eateries say that the online ordering services have taken on such a powerful position that it’s time for the government to step in.

“We’re just caught over a barrel,” said John Schall, owner of El Jefe’s Taqueria. He said commissions for delivery services from his Harvard Square restaurant have always been hard to swallow, but now, with delivery making up a huge proportion of his sales, he has no choice but to keep paying.

He said delivery commissions have risen from 8 percent of the restaurant’s costs in February to 16 percent now.

Jonatas Seller, regional manager at El Jefe's Taqueria in Cambridge, worked the counter in the restaurant's taped-off dining area on Thursday.Blake Nissen for The Boston Globe

As the crisis began to unfold, some delivery services rolled out programs for restaurants to defer payments, but they have continued to face pushback from some restaurants. In recent days, DoorDash has said it will halve its commissions until at least June, a measure it says will save restaurants $100 million across the United States, Canada, and Australia.

Some restaurants say the service has been invaluable in helping them retain at least some viability during the crisis. Deirdre Auld, director of operations for the Salty Pig in Boston, said the restaurant never did delivery before the crisis but has been using DoorDash and its subsidiary Caviar in recent weeks.

“For restaurants, there aren’t a lot of alternatives right now," she said. "Takeout is great, but more often than not people aren’t comfortable leaving their homes.”

Janelle Nanos can be reached at Follow her @janellenanos. Andy Rosen can be reached at