Third Party Delivery Services Overview
The COVID-19 pandemic might have hit the hospitality industry the hardest, especially our local restaurants. Due to public safety measures (such as social distancing, no interior dining, and staffing issues), both consumers and restaurateurs turned to Third Party Delivery Services. Although these services can increase revenue streams and provide greater access to the community, they come with a fee and sometimes inequitably set fees (up to 30% of the order in some cases).
After Business Licensing received multiple complaints, Emergency Regulation 2020-20 was enacted in late 2020, laying out protections for businesses and standards of operations for Third Party Delivery Services. Business Licensing, working with the City Attorney, created a permanent ordinance to replace the temporary regulations. The new ordinance sets a reasonable and predictable cost for Third Party Services. It establishes regulations to control fee variability that have a greater impact on small businesses.
The Third-Party Delivery Services ordinance (Title 13 Licenses and Business Regulations, amended to add Chapter 353) was unanimously approved by Council and the Mayor December 2021. The MCO almost directly mirrors Emergency Regulation 2020-20.
The base concepts of this ordinance are as follows:
- No services shall be performed (including being listed on the app) without consent of the licensed food establishment.
- Delivery fees are capped at 15% unless a mutually agreed upon contract that provides for extended services has been signed by all parties involved.
- Third-party service platforms have a base level of service provided and they cannot refuse to accept any businesses that only wish the bare minimum (15% cap).
- Receipts must be provided to the customer that show the breakdown of costs:
- Menu price of food
- Sales and/or any other tax
- Delivery or service charge paid by the customer
- Driver tip
- Third party apps cannot charge licensed food establishments for direct telephone calls between the customer and establishment.
- Licenses and Consumer services will handle complaints following standard enforcement action processes up to and including citations and/or misdemeanor prosecution.