NEWARK – Along with many other Bay Area cities, Newark City Council has unanimously decided to cap fees on apps for delivering groceries to restaurants in hopes of slowing the bleeding of local businesses affected by restrictions in the area Coronavirus pandemic are affected.
“We are in a war. And the victims of the war, because many of them are our restaurants, ”said Mayor Al Nagy at a council meeting on Thursday evening about the pandemic.
Effective immediately, all third-party grocery delivery services such as DoorDash, GrubHub, and Uber Eats must limit restaurant fees in Newark to a maximum of 15 percent per order.
The upper limit will remain in force until the Council ends the state of emergency declared in March on the ground.
The vote to approve the rule was 4-0. Councilor Maria Collazo withdrew from the vote because she owns the Mexican tortilla factory in Newark.
City officials said the companies running the apps were routinely charging 25 percent or more of each order before the ordinance went into effect, with DoorDash charging up to 33 percent in some cases.
Roman Espinoza, the owner of Cal Eats Fresh Mexican Grill on Cedar Boulevard, said in an interview Friday the city-imposed limit would be a welcome relief.
“It definitely affects the bottom line,” he said of the high fees charged by delivery apps.
The roughly 30 percent per order he was billed was costs that he was able to offset with other dine-in and direct take-out stores prior to the pandemic, as only about 20 percent of his orders were placed through the apps , he said.
And for a restaurant like his, which has only been open for six years, he viewed the apps more as a way of attracting potential new customers in the region.
“The way they are presenting it to you is, ‘We’re going to put you in front of millions of customers,” he said.
Due to pandemic food restrictions, including recent Alameda County’s health care contracts that allow restaurants to only accept delivery-and-take-away, the apps business now accounts for “80 to 90 percent” of its orders, and fees are a big part of it his winnings.
“At this point, if you don’t have personal delivery that you offer at the store level, you have to use these third party apps. We’re under pressure somehow, ”said Espinoza.
The fees only worsened a situation caused by pandemic restrictions in a year he was forced to cut half of his staff.
“I just have to put in a lot more hours,” he said.
“These are usually smaller businesses, mom and pop businesses that hire locals to work in these restaurants,” said Nagy at the meeting about whom the cap is supposed to help.
“We don’t like disrupting the free enterprise system, but in some cases you have to. And I think this is one of those times when we have to do this just to protect our businesses. “
City officials estimated the cap on restaurants they surveyed could save between $ 375 and $ 750 a week. Espinoza said these types of savings could help his business through the pandemic and generate more profit to pay the wages of the minimal employees he currently has or his rent.
Delivery companies found to be violating the Newark limit could be cited by the city, and restaurants could file civil lawsuits against them if they so choose, city officials said.
No penalty will be imposed for violations within the first 14 days after the order takes effect, as long as the excess fee above the maximum is refunded within 15 days, the city said.
Many other cities in the region, state, and nation have already adopted similar caps, including Fremont, Hayward, San Leandro, San Francisco, Los Angeles, and New York City. San Jose and Santa Clara Counties are considering approving caps soon.
“Pricing could result in us increasing costs for customers, which could result in fewer orders for local restaurants and less earning potential for dashers,” DoorDash said in a statement emailed Friday afternoon.
“Pricing can also remove options available to restaurants by limiting their ability to choose additional services to support their business. We continue to focus on working with policy makers to find solutions that better support restaurants, customers and dashers, ”the statement said.
“We are trying to save our companies, to make sure they are here, and to save your (delivery) business,” said Councilor Mike Bucci, echoing the point of view of the city officials.
“I think this is a no-brainer. And we certainly will not place our restaurants at a competitive disadvantage for Fremont. That won’t happen, ”Bucci said with a chuckle.
As Espinoza was preparing to open his shop for service on Friday morning, he adopted an optimistic tone.
“We hope to be busy,” he said.