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Chicago’s 15 Percent Delivery Fee Cap Extension Stalls

Grubhub and DoorDash will have to wait until June for the City Council to take action

DoorDash Path To $3 Billion IPO Dogged By Tense Restaurant Ties
Chicago officials first capped delivery fees on restaurants in November.
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The effort to extend Chicago’s pandemic 15 percent cap on third-party delivery charges for restaurants stalled at Wednesday morning’s City Council meeting, but the measure could be approved next month.

In November, city officials instituted a cap on fees that companies like DoorDash, Grubhub, and Uber Eats can require of restaurants as COVID-19 halted dining room service and forced restaurants to rely on takeout and delivery. The cap expired in late April as the city lifted more restrictions on restaurants as vaccinations became more prevalent.

There haven’t been reports of third parties reverting to pre-pandemic commissions. Last year, local restaurant and bar owners spoke out about the already enormous strain of indoor dining bans, arguing that forcing them to pay delivery companies 20 to 30 percent of what they charge to customers was a step too far. At the time, officials stated that the fee cap policy would expire when indoor dining capacity reached 40 percent for 60 consecutive days.

Still, some are concerned about the impact a fresh round of high fees may have on recovering restaurants: In April, Ald. (32nd Ward) Scott Waguespack submitted a proposal to extend the cap until all government mandated pandemic restrictions on indoor dining are removed for 180 consecutive days. These include regulations on capacity, social distancing, party size, and hours.

It took the city eight months after Gov. J.B. Pritzker first halted indoor dining service in Illinois to adopt a fee cap. Third parties exerted pressure on council members to delay the initial ordinance, but it doesn’t appear Wednesday’s actions at City Hall were affected by lobbyists. Ald. (15th Ward) Raymond Lopez blocked the proposal, as it was part of a lengthy draft ordinance that included a surprise move to stop liquor sales in stores after 10 p.m. Lightfoot had expressed support for reimposing fee caps until the pandemic ends.

Lopez wasn’t immediately reached for comment by Eater, but tells Alex Nitkin of the Daily Line that he diverted the ordinance to send a message — ostensibly to Lightfoot — that that “...you need to be collaborative and truthful so people aren’t surprised the day of the introduction.”

Prior to Wednesday’s vote, a spokesperson for DoorDash pointed to the brand’s recently revised pricing structure, which includes a plan with a 15 percent delivery commission rate, as evidence that it is operating in good faith. They did not mention the $1.50 “Chicago Fee” the company instituted on customers last December to compensate for the council’s cap:

DoorDash has always supported Chicago’s restaurants. Price controls lead to fewer orders for restaurants and lost earnings for Dashers. Earlier this year, we announced a new pricing structure to provide more choice, flexibility and transparency, enabling local restaurants to choose a pricing plan with a delivery commission rate as low as 15% with the ability to add additional services and options. City Council should look to solutions that would actually make a long-term difference for small businesses, like direct funding.

For its part, a Grubhub spokesperson opted to emphasize the company’s unhappiness with Lightfoot rather than tout a plan of its own:

We are disappointed the Mayor is again trying to pass another arbitrary price control, more than a month after the last one expired. The proposed new price control would not only violate state and federal laws, it would also fail to provide the support Chicago’s restaurants need right now. Arbitrary fee caps impact how many orders restaurants receive by limiting the services they can contract for with companies like Grubhub to drive more visibility and business. Fewer orders means less work opportunities for drivers and increased costs for diners.

  • Lightfoot Backs Reimposed 15% Cap on Fees Charged by Delivery Companies [Chicago PBS]
  • Illinois Could Bar Delivery Companies From Listing Restaurants Without Permission [ECHI]
  • Chicago’s 15 Percent Delivery Fee Cap for Grubhub and DoorDash Has Expired [ECHI]
  • Chicago Finally Implements Fee Caps for Grubhub and DoorDash [ECHI]
  • Chicago Restaurants Roast Third-Party Delivery Apps at City Meeting [ECHI]

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