Supporting San Leandro Restaurants – City Limits Fees from Food Delivery Companies

In support of local businesses in San Leandro, the City of San Leandro has issued a declaration establishing a temporary limit of 15% on fees charged to restaurants by third party food delivery companies. This declaration will take effect on July 13, 2020 and remain in effect until the Alameda County Public Health Order permits dine-in service.

Since the initiation of the Alameda County Shelter-in-Place order on March 17, 2020, many San Leandro businesses, including restaurants, cafés, and other food and beverage businesses, have been closed, or limited to pick up service only, in order to protect employees and customers and limit the spread of the COVID-19 virus.  The orders’ restrictions have devastated local businesses, particularly small service, food and other direct customer serving businesses.

During this time, online ordering and delivery of food has become a critical lifeline to many restaurants, as well as residents who need to order food while remaining safe.  In order to assist with the ordering, delivery, and marketing, many food businesses utilize third party food delivery companies, such as DoorDash, GrubHub, Postmates, and UberEats.  These companies typically charge restaurants a fee of 20% – 30% of the total order to cover the cost of their services.

City and San Leandro Chamber of Commerce staff have reached out to restaurants and other food businesses to gain feedback on their experience with food delivery fees. While the businesses value the service, they find that the high fees make it hard to cover their costs, particularly as they do more and more of their business through delivery.

In response to the high service fees and resulting impact on local restaurants, cities across California and the United States have put limits on the fees that food delivery companies may charge in an effort to ease the financial burden on struggling restaurants during this emergency.

On July 6, 2020, the City Council directed City Manager Jeff Kay, acting as Director of Emergency Services, to issue a declaration establishing rules and regulations for a 15% limit on fees charged to restaurants by food delivery companies.  This declaration applies to orders placed by customers on online platforms provided by third party food delivery companies.  Restaurants with fewer than 11 locations may receive the reduced fees.  If a third party food delivery company charges a restaurant a fee greater than 15%, the restaurant may request a refund.

City staff are sharing information about the new regulations with restaurants and food delivery companies.  For more information, visit the City’s COVID-19 Business Resource page or contact Katie Bowman, Economic Development Manager, at kbowman@sanleandro.org or 510-577-3327.