As many third-party delivery platforms continue to charge hefty commission fees to pizzerias and other restaurants struggling with declining sales, the city of San Francisco has stepped in with a new mandate: These companies can charge no more than 15% commission to restaurants during the coronavirus pandemic.
Mayor London Breed said the temporary rule will be enforced either as long as a state of emergency (declared on February 25) remains in place or until restaurants can resume offering dine-in services, whichever comes first.
Restaurants across California have been forced to close down their dine-in services due to the pandemic, and delivery and carryout are the only way for many to survive. For those that haven’t traditionally offered delivery in the past, third-party services can help, but at a steep price of up to 30% commission fees on every order.
“Restaurants across San Francisco are struggling to stay open,” Breed said in a statement. “In these tough financial circumstances, every dollar counts and can make the difference between a restaurant staying open or shuttering. It can make the difference between staying afloat or needing to lay off staff.”
“We’ve listened to our restaurants and the struggles they’re facing during this unprecedented time,” Supervisor Ahsha Safaí added. “The high commission fees being charged to our businesses remain unchanged, and that cannot continue as every dollar can mean staying open or laying off more staff. For San Francisco’s rich network of mom-and-pop restaurants to survive, it’s imperative that we move aggressively.”
While some delivery services have waived fees for their customers, they’re still charging the restaurants a commission, ranging between 10% and 30%. Breed’s press release notes that high commissions can “wipe out a restaurant’s entire margin.”
Of the approximately 4,000 restaurants in San Francisco, the Golden Gate Restaurant Association estimates 30% to 50% are still operating and offering food delivery. The California Employment Development Department and U.S. Department of Labor report that a large number of the state’s 2.3 million initial unemployment claims since March were filed by service industry workers.
Laurie Thomas, executive director of the Golden Gate Restaurant Association, expressed support for the mayor’s new rule. “We have been advocating for this type of relief for the past month, and we are appreciative of the progress,” she said in a statement. “This move by the city will help ensure our restaurants who are staying open [can] deliver much needed food and continue to help keep staff on payroll in addition to giving them a better chance of keeping their doors open.”