Chicago to Hold Special Monday Meeting on Food Delivery Fees

Chicago’s city council has called a special joint committee meeting for Monday afternoon when members will discuss food delivery fees. A public notice states that no vote will be taken at the meeting, but it’s the next step as council members last month introduced policy that would institute a 5-percent cap on delivery fee from third-party couriers, including DoorDash, Grubhub, and Uber Eats. That limits what the companies could collect from restaurants.

Chicago’s current proposal is the steepest cap in the country. Similar policies have been adopted in San Francisco, Seattle, and Washington, D.C., All three cities have capped fees at 15 percent. On Wednesday, New York approved a 20-percent cap that includes a 5-percent cap for takeout orders. Chicago’s next City Council meeting is scheduled for Wednesday.

Restaurant owners don’t know what to expect at the meeting, which will be video streamed. Last week, the city announced plans to require third parties to break down its fee structures on receipts. This way, customers would know how much restaurants are paying to the delivery companies. There’s much confusion surrounding fee structures. For example, Grubhub charges restaurants a “marketing fee,” which varies. Restaurants could pay more in marketing if they want to come up more prominently in searches and allowing customers to see them before competitors. That’s different from a commission. All in all, third parties charge restaurants around 30 percent of an order’s total.

Both DoorDash and Grubhub object to fee caps. These companies argue that a cap would restrict what it could pay drivers. During Grubhub’s earnings call last week, CEO Matt Maloney said there’s a misconception by the public who think the company is pocketing fees from increased business during the pandemic. He said that Grubhub is taking that money and “driving it through the platform.” He added that Grubhub saw orders at independent restaurants in San Francisco fell about 10 percent since that city instituted its 15-percent cap. Grubhub defines “independent restaurants” differently. Restaurants part of Lettuce Entertain You Enterprises — Chicago’s largest hospitality company — fall under Grubhub’s definition.

Grubhub and others have also said they’ve been good community members during the pandemic. Grubhub deferred collecting its marketing fees. Uber Eats offered to waive all pickup fees for restaurants. That meant the company would pay for credit card transaction fees. Locally, Tock — founded by Alinea Group co-founder Nick Kokonas — is charging restaurants 3 percent. Those costs have been waived this month due to a sponsorship with S.Pellegrino.

32nd Ward Ald. Scott Waguespack introduced the fee cap in late April. He’s the chair of the council’s finance committee, which will hold the joint meeting with the city’s committee on license and consumer protection. 37th Ward Ald. Emma Mitts is that group’s chair.

For Monday’s meeting, committee leaders are seeking written public comment. Restaurant owners have until 2 p.m. Friday to submit comments via email to MARYE.PHILLIPS@CITYOFCHICAGO.ORG, CARL.ERICKSON@CITYOFCHICAGO.ORG, or OWEN.BRUGH@CITYOFCHICAGO.ORG.