Minneapolis Caps Food Delivery Fees at 15%

The city makes permanent a pandemic-related limit on the surcharges food delivery firms can impose on restaurants.

December 14, 2021

DoorDash Delivery Service with Fees

MINNEAPOLIS—The city of Minneapolis has enacted a permanent cap on commission fees charged to restaurants by food delivery companies, reports the Minneapolis Star Tribune. The ordinance limits fees to 15%, and it will be illegal for delivery companies to charge higher fees for additional services, like advertising or order placement, without consent from restaurants.

During the COVID-19 pandemic, the city imposed an emergency order that capped the fees. The emergency order expires in February, as many restaurants in the city say that the cap allowed them to hire and pay more staff. Some small restaurants are concerned that if the emergency order lifts, they will have a hard time making a profit once the delivery companies resume charging them 30% for services.

"Capping [delivery companies] levels the playing field … Everybody has to play by the same rules," Sam Turner, owner of the Nicollet Diner and Muffin Top Cafe in Minneapolis, told the Star Tribune. Turner asked the council to make the fee caps permanent to help small, independent operators.

Food delivery companies are pushing back against the legislation, saying that the cap would raise prices for consumers, resulting in fewer orders for restaurants and less business for food delivery workers. Uber said that the permanent regulations "would make it difficult, if not impossible" for them to do business in Minneapolis. DoorDash said the ordinance was an interference that's "detrimental to local economies" and a violation of the U.S. and Minnesota constitutions.

In September, DoorDash, Grubhub and Uber Eats filed a lawsuit against the city of New York over a newly passed bill that permanently instates emergency delivery fee caps that were imposed during the pandemic. The suit claims that the price controls “will harm not only Plaintiffs, but also the revitalization of the very local restaurants that the City claims to serve.”

The bill creates a 15% fee cap for delivery services and a 5% cap for nondelivery services, and the delivery companies claim the caps are arbitrary. A similar lawsuit was filed by DoorDash and Grubhub in San Francisco after the city implemented a permanent 15% delivery fee cap.

Also in September, New York City passed a package of six bills aimed to improve food delivery workers on-the-job conditions.

The bills prohibit food delivery apps and courier services from charging workers fees to receive their pay, set minimum payments per trip and mandate that apps disclose their gratuity policies. The measures also prohibit charging delivery workers for insulated food bags and stipulate that restaurant bathrooms must be available to delivery workers or otherwise subject to a fine. The bills also allow delivery workers to determine which deliveries they want to take without fear of retribution, as workers have been targeted by robbers.

In order to meet the customer’s need for delivery, many convenience stores are turning to third-party delivery providers, but partnering with these companies comes at a cost. According to NACS’ “Last Mile Fulfillment in Convenience Retail” report, only 61% of retailers are satisfied with their third-party delivery partners. Concerns include high fees, little access to consumer data, difficulties delivering age-restricted products and service and operational issues. Read more about these challenges and what c-stores are doing to make delivery work for their businesses in “Delivering Convenience” in the December 2021 issue of NACS Magazine.

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