Alameda takes on third-party food delivery giants

DoorDash calls Alameda's ordinance the 'most restrictive price control of its kind in the entire country.' Plus more inside!

Alameda restaurant on Central Avenue advertising its use of third-party food delivery service GrubHub.

CITY NEWS

ALAMEDA

—BIG DELIVERY IS NERVOUS—DoorDash, Uber Eats, and GrubHub may soon be knocking on Alameda City Hall’s front door. Instead of a bag of McDonald’s burgers and picked at French fries, they might be expecting a hand-delivered lawsuit.

—The Alameda City Council approved on Tuesday night what is believed to be the strictest limit on exorbitant third-party food delivery fees in the country.

—Alameda’s ordinance codifies a recently lapsed temporary pandemic-era rule that limited third-party food delivery fees to 15 percent of the total order. The ordinance’s sunset was tied to the city’s emergency health order, which ended last August.

—Alameda’s ordinance is similar to one passed in San Francisco, which resulted in a lawsuit and settlement with third-party food delivery services.

—Alameda’s ordinance is for, at least, two years, while San Francisco’s ordinance is permanent. Alameda has a provision that allows fee increases based on the Consumer Price Index.

—In addition, third-party delivery services can petition for an administrative hearing with the city when seeking changes to the ordinance. The process is similar to the city’s rent protections, said Yibin Shen, Alameda’s city attorney.

—MESSAGE DELIVERED—Representatives from each of the big third-party food delivery companies registered opposition to the new version of the ordinance this week. Some hinted at legal action against the city.

—A representative from DoorDash said Alameda’s ordinance goes far beyond San Francisco’s by putting permanent limits on what they charge customers and restaurants.

—“If passed it would be the most restrictive price control of its kind in the entire country, imposing an unprecedented level of control over a single industry. Capping both ends of the revenue stream severely limits our ability to ensure restaurants, drivers, and consumers receive the types of services they’ve grown accustom to.”

—Some Alameda councilmembers were undettered by the threat. [Alert: Quote of the Year Nominee] “This, to me, is a one-of-a-kind ordinance that scares the bejeebies out of behemoths like the Ubers of the world, or the DoorDashes of the world,” said Alameda Councilmember Tony Daysog.

—“I think it scares them because it might wash up on to the shores of other cities in the Bay Area or throughout California,” Daysog said. In addition, the delivery companies offered no evidence the previous ordinance has harmed their business models, he added.

—“If the corporate behemoths like Uber of the world or the DoorDashes of the world want to sue Alameda over this, they can.” Daysog continued.

—“I’m not afraid to be the first city to impose protections for the consumer,” said Marilyn Ezzy Ashcraft, Alameda’s mayor. “I think this is how we protect our restaurants,” she added.

—Alameda Councilmember Tracy Jensen did not support the cap on consumers, but backed the cap on restaurants, she said. Jensen voted against the ordinance, as did Councilmember Trish Herrera Spencer.

—EXORBITANT FEES—Apps like DoorDash, GrubHub, and Uber Eats were a saving grace during the worst months of the pandemic for many Alameda restaurants, and those in other East Bay cities.

—As customers grew comfortable with food deliveries, instead of dining-in or picking up food, rising fees charged by third-party food delivery companies started cutting deeply into restaurants’ bottom line.

—In some cases, the fees charged by third-party delivery services in Alameda, rose as high as 31 percent of the order, with many averaging between 20-30 percent, city staff said.

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