Spokane City Council poised to cap third-party delivery fees at 15 percent
Local business leaders, and those in the restaurant industry are divided over a city of Spokane proposal to cap food delivery fees.
Restaurants support the proposal, saying food delivery companies have a far broader reach, but are charging more they can afford. They said they’ve accumulated tens of thousands in debt during the pandemic, and are struggling against rapidly increasing inflation.
Derek Baziotis, a representative from Spokane County’s hospitality association, told the city council Monday that delivery companies fees can be as high as 30 percent.
“This is ordinance is an issue of setting boundaries between industries. And quite frankly, the hospitality industry is getting taken advantage of,” he said.
Many restaurants are in support of regulating the delivery industry, saying changes during the pandemic left them dependent on delivery companies to connect with customers.
Dean Feldmeier, general manager of the Double Tree hotel in Spokane, which has a restaurant, told the city council that a 15% fee cap is fair with how small restaurant’s profit margins are.
“Generally, I’m not in favor of cities or governments overly managing these things, but make no mistake, major national delivery companies, are really marketing organizations, and they don't have a lot of investment in the community, he said. “They pay their delivery drivers pretty low wages, but at the same time, our owners of our local restaurants really add to the fabric in our community.”
Business leaders say the city council shouldn’t regulate food delivery companies. Jake Mason, a representative of the pro-business group Greater Spokane Incorporated, told the city council that they should let the free market sort out the problem.
"This ordinance will continue to stymie innovation, and competition in a space that is already fiercely competitive."
Door Dash, one of three delivery companies that operates in Spokane, pointed to 15 percent plan they already offer to restaurants. In a statement, they said the proposal may lead to unintended consequences.
“Price controls are unnecessary and often lead to damaging unintended consequences. These policies can limit service options for merchants and drive up prices for consumers, leading to fewer orders for merchants and lost earnings for Dashers. We are eager to engage with policymakers on solutions that better support restaurants, customers, and Dashers."
The City of San Francisco passed a similar policy, and was sued by Door Dash, and another food delivery company, Grub Hub.
The city council will vote on the proposal during their 6 p.m. Monday meeting.