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Third-party delivery services push back against San Francisco cap

Several of the top restaurant food delivery services pushed back against a 15% cap on restaurant food delivery fees announced Friday by San Francisco in order to help independent restaurants impacted by social distancing regulations amid the COVID-19 pandemic. 

Mayor London Breed announced the delivery fee cap late Friday in a bid to help local restaurants manage the costs of operating under the restrictions, which required that restaurants only operate using takeout and delivery. San Francisco announced a state of emergency in late February, following an outbreak of the coronavirus in the Bay Area near Sacramento.

"Restaurants across San Francisco are struggling to stay open," Breed said in the announcement posted on the city's website. "In these tough financial circumstances, every dollar counts and make the difference between a restaurant staying open, or shuttering."

Breed said the cost of the delivery commissions can make the difference between being forced to shut down or continuing to operate. 

According to the city's announcement, some third-party services have waived delivery fees for customers, but in many other cases, restaurants are being charged commissions of between 10% and 30%. 

Several of the major third-party delivery services said they were working to support local restaurants but expressed opposition to the caps.

A spokesperson for DoorDash pointed to the 50% commission cut it announced on Friday, saying it would help 1,600 restaurants in the city and more than 150,000 restaurants across the U.S., Australia and Canada.

"We are reviewing the Mayor's order, including whether the program we have introduced is more beneficial to restaurants and the legal basis for such an extraordinary unilateral action," the spokesperson told Mobile Payments Today. "At the same time, we will maintain our ongoing commitment to protecting Dashers and ensuring they had strong earning opportunities, especially during this crisis when there are so many struggling to make ends meet."

A spokesman for Grubhub said the company was founded as a fee-for-service model and that San Francisco restaurants have always been able to get Grubhub orders for less than 15%. 

"Many restaurants choose to pay more than 15% in order to access additional advertising or other products and services," the spokesperson told Mobile Payments Today, via email. "In the face of this new policy shift, we are going to give restaurants the ability to pass some of these additional costs onto customers."

The spokesman said this would result in significantly higher diner fees and fewer restaurant orders. He said restaurants know what's best for their business and said Grubhub is committed to providing them support.

A spokesperson for Uber raised similar concerns about the cap. 

"We support efforts to help the hospitality industry, which is why we've focused the majority of our efforts on driving demand to independent local restaurants - a key concern of our partners during these unprecedented times," he told Mobile Payments Today via emai. "Regulating commissions would force all delivery platforms to radically alter the way we do business, which could ultimately hurt those that we are trying to help the most: customers, small businesses and delivery people."

The Golden Gate Restaurant Association estimated that out of 4,000 local restaurants in the city, about 30% to 50% were still operating and delivering meals to customers.

Data from the U.S. Department of Labor and California Employment Development Department showed that a large percentage of the state's 2.3 million initial unemployment claims since March come from the service industry.