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Alderman proposes extending cap on third-party restaurant delivery fees

The ordinance prohibits third-party food delivery services operating in Chicago from charging restaurants “any combination of fees, commissions or costs” greater than 15% of a restaurant’s net sales processed through the delivery service.

DoorDash
A cap on delivery fees charged by third parties, such as DoorDash, would be extended into the fall under a proposal being introduced at Wednesday’s Chicago City Council meeting.
Associated Press

Two weeks after the City Council capped fees on third-party food delivery services, DoorDash in December one-upped aldermen by imposing a $1.50 “Chicago fee” on all orders placed with restaurants in the city.

Now, the prime mover behind the cap is countering — by introducing a new proposal that would extend the life of the cap on restaurant delivery fees from July through at least the fall.

The ordinance introduced by Finance Committee Chairman Scott Waguespack (32nd) is identical to the one approved by the Council last fall.

It prohibits third-party food delivery services operating in Chicago from charging restaurants “any combination of fees, commissions or costs” for delivery “greater than 15 percent of the food dispensing establishment’s monthly net sales processed through” the third-party delivery service.

What Waguespack called the “table-setting” ordinance includes no specific date for the new cap to expire.

But the alderman said he hopes to convince his colleagues to keep it in place at least through the fall to help Chicago restaurants fighting for survival after twice being ordered to stop serving indoor diners and still being forced to limit indoor capacity to 50%.

“Restaurants are still suffering through a lot of different issues. Even the ones that are starting to reopen are having a very hard time even finding staff. There’s basically a drought of restaurant workers right now. And I’ve had a couple more just close. We’re just trying to find different ways to help `em out,” Waguespack said.

“We’re also looking about waiving some of the fees for the annual licenses. We haven’t had lengthy discussions on it. But, that is on the table as well.”

Waguespack acknowledged the 15% cap has benefited restaurant patrons, but he also argued it helps restaurant owners as well because, if they’re not being gouged, “they don’t have to go and rely on their own services” to make deliveries.

The alderman said he was galled by the so-called “Chicago fee” imposed by DoorDash.

“They just found a work-around, which is really unfortunate that they would do that, and sort of blame it on the city, because they had not done that in other cities and created a separate fee that I know of. It was just another form of price-gouging,” Waguespack said.

DoorDash could not be reached for comment.

Illinois Restaurant Association President Sam Toia applauded the proposed extension.

“We are still in a pandemic. We’re still only at 50% capacity in Chicago. More and more people are getting the vaccines. We are starting to see light at the end of the tunnel. However, restaurants, especially in our Central Business District, will not be back to full capacity and seeing sales like they did in 2019 until we get our convention and tourism business back. That means they still need help,” Toia said.

“The cap on third-party deliveries helps restaurants. Restaurants in places like Lincoln Square and Brighton Park were paying upwards of 30% fees to third-party delivery services. The caps cuts that in half. That makes a difference in an industry where every penny and nickel matters.”

Uber Eats, Grubhub, DoorDash and other third-party online order and delivery services charge restaurants for their services.
Uber Eats, Grubhub, DoorDash and other third-party online order and delivery services charge restaurants for their services, but those fees have been capped under a city ordinance that could be extended through the fall.
Associated Press

Toia said he is also talking to the city about ways to “streamline” permitting for another expanded outdoor dining season that includes, streets, sidewalks and adjacent parking lots.

The $1.50 Chicago fee falls squarely on the customer — not the restaurant.

“During this unprecedented time, providing the best possible service for our community is critically important,” DoorDash said on the day it imposed the Chicago fee.

“In select cities where lawmakers have imposed price regulations that limit our ability to work with restaurant partners, DoorDash is considering various measures to offset their unintended consequences … In some cases, this means charging customers an additional fee when they order from restaurants in their city to help ensure that we can continue to offer them convenient delivery while helping to ensure that Dashers are active and earning, and that merchants can access the services to help drive volume as dine-in remains limited.”