More and more restaurants are closing their doors for good due to the coronavirus pandemic. But a service that many think supports restaurants is actually bleeding us dry.
Food delivery companies such as DoorDash, UberEats, and GrubHub offer cheap and immediate food delivery amid skyrocketing demand from customers who are rightfully staying home. Their business model is trampling the struggling, independent restaurants they claim to be serving.
These companies have taken advantage of the COVID-19 emergency by charging delivery fees on independent restaurants of up to 30 percent of the total bill. Large national restaurant chains are able to negotiate lower rates, but fees are largely non-negotiable for local businesses. They’re profiteering off the backs of local restaurants at a time when those restaurants are at death’s door. On Dec. 9, amid another wave of restaurant closures, DoorDash celebrated its position as one of the big economic winners of the pandemic when investors drove the company’s valuation above $30 billion. The growth of these companies comes on the backs of restaurants and low-wage delivery drivers — most of whom don’t receive benefits.
With the virus still raging and indoor dining at scale far in the distance, Beacon Hill should cap delivery fees at a reasonable rate and help local restaurants — and the people whose livelihoods depend on them — survive the winter.
For nine months, restaurants have been struggling to reinvent themselves and survive. We’ve changed our hours and menus. We’ve built patios and carved extra seating out of sidewalks, parking spaces, and closed roads. We’ve purchased heat lamps and Plexiglass barriers, and reworked our websites for takeout orders. But in too many cases, it hasn’t been enough.
The National Restaurant Association estimates that nearly 20 percent of America’s restaurants have closed for good. In an industry with the thinnest of margins, many great restaurants simply couldn’t make the math work. The outrageous cost restaurants now pay to have their food reach customers exacerbates the struggle. In one widely-shared social media post from last spring, a Chicago chef showed that GrubHub fees and charges had eaten up 65 percent of his take on $1,000 of orders. Each of us has had dozens of conversations with restaurant owners who’ve said some version of, “I want to offer delivery, but I’m losing money on every order.”
In an effort to shore up struggling local businesses, cities and states across the country have enacted reasonable caps to protect restaurants from predatory fees, including Los Angeles, New York City, Chicago as well as New Jersey and Washington State. The delivery companies have repeatedly threatened litigation and to leave town wherever caps are proposed, only to back down and adjust when the measures pass. The companies have also resisted calls to voluntarily reduce their fees to affordable levels during the emergency, even as restaurants continue to close en masse.
Unfortunately, Massachusetts has fallen behind this national push. Last summer, the House unanimously passed a measure, sponsored by Ways and Means chair Representative Aaron Michlewitz of Boston, that would temporarily cap fees at 15 percent of the total bill. The language also was included in the House version of the economic development bill, which is currently in conference committee. Both Michlewitz and Senator Eric Lesser of Longmeadow, who are leading the bill negotiations, have been consistent champions of struggling restaurants and other industries hard-hit by COVID-19, but with the legislative session ending on January 5, time to act is running out.
By acting on fee caps, the state can make it a little easier for restaurants to survive the winter on takeout and delivery. Together with the additional round of Paycheck Protection Program loans included in the federal pandemic relief bill signed over the weekend by President Trump as well as Governor Baker’s new relief fund, these measures can be a lifeline to help pay wages and keep businesses alive. State and local policymakers should also consider other steps to support our industry, including reductions on liquor and other licensing fees and assistance for locally-owned restaurants that have struggled to access relief programs.
With the COVID-19 vaccination now underway, we again can look forward to celebrating with friends and family around a table at a cherished local restaurant. But without aggressive action, too many of our favorite spots will be gone before the spring arrives. Massachusetts must end pandemic profiteering by food delivery companies and help ensure that restaurants can reopen their doors.
Jody Adams, Bessie King, and Ken Oringer are Boston-based chefs and leaders in Massachusetts Restaurants United, a grassroots advocacy group formed during the pandemic.