Clark County Commissioners passed a new emergency ordinance that caps fees charged by third-party delivery apps at 15 percent.
The new ordinance goes in effect immediately and only allows companies such as Uber Eats, GrubHub, Postmates, and DoorDash to take 15 percent of the cost of food ordered through their apps for takeout or delivery. Delivery companies were charging restaurants as much as 30 percent for delivery fees.
Kristen Corral, one of the founders of Tacotarian, the vegetarian Mexican restaurant in the southwest and the Arts District, brought restaurateurs’ concerns about the costs, which can sometimes surpass the amount of money paid for rent, to Clark County Commissioner Tick Segerblom, who introduced the emergency ordinance.
“We’re looking at a disaster for our restaurant industry,” Segerblom says of the measure meant to help restaurants stay alive. “We’re talking about almost 50 percent may go under, if they haven’t gotten there already.”
Restaurant owners hoped for a 10 percent cap on delivery fees, but commissioners opted to start with a cap at 15 percent. These fees typically aren’t passed on to customers, instead taken out of the amount the restaurant charges for food. So if a restaurant charges $30, the app companies charge $10 to handle the order, whether it’s for delivery or takeout.
A number of restaurant owners showed up at the meeting to express their support for limiting the amount third-party apps can charge. “You’ve got guests, they’re literally afraid to go out in public, which I totally appreciate,” says Marc Marrone, who owns Graffiti Bao and is a partner in Egg Sammie and Locale Italian Kitchen. “Even if we have 50 percent capacity, we don’t necessarily fill it, because people are afraid to go out and they rely on delivery to ensure that you eat and provide meals to the families.”
Others noted that the cost of paying delivery apps cut into their profits, which dwindled since the coronavirus pandemic started. “At the outset of the pandemic, our sales dropped 45 percent,” says Colin Fukunaga, who owns FukuBurger. “The delivery apps publicly [act] like they were the savior of the restaurants when in fact they acted more like sharks swimming around a carcass.” While delivery fees have not gone up during the pandemic, the companies did offer customers $10 off delivery when the pandemic started to encourage delivery, but restaurants ate that cost, he notes.
The cost alone of delivery has hurt some restaurants who are trying to remain open.
“We’re struggling to keep our staff employed to keep our doors open during these times and we’re incurring additional costs, not only to ensure the safety of our team members but also to ensure the safety of the public,” says Lin Jerome, who co-owns Cafe Lola, Saint Honoré, and Pizza Anonymous. “As our costs are increasing, our revenue is drastically down, and our bills have not changed. What has changed is we are now forced to sign up with third-party delivery apps with fees of 30 to 35 percent, which are drastically cutting into any profit margins that we may have.”
The new ordinance only applies to restaurants in unincorporated Clark County, which includes the Las Vegas Strip but does not effect restaurants in the City of Las Vegas, which includes Downtown, Chinatown, and parts of Centennial; North Las Vegas; and Henderson.
On May 20, the LA City Council passed a 90-day ordinance that capped delivery fees for restaurants at 15 percent, while also limiting non-delivery fees, such as arranging pickup and takeout order, at five percent of the total sale. San Francisco passed a similar delivery fee cap on April 10.