DoorDash is accused of ‘thwarting’ Philadelphia’s cap on food-delivery fees

DoorDash, the food-delivery giant, rolled back many restaurants' commission plans.

DoorDash, the prominent player in third-party restaurant delivery services, has come under scrutiny in Philadelphia for allegedly circumventing the city’s fee regulations implemented during the pandemic. The city had introduced a cap of 15% on delivery commissions to support local eateries during challenging times. However, some restaurateurs have voiced concerns that DoorDash’s recent actions could lead to higher fees for both businesses and consumers.

In late June, DoorDash sent an email notification to its Philadelphia restaurant partners, indicating that their agreements would be automatically reverted to their pre-pandemic terms. For certain establishments, this could result in plans that are twice as expensive, encompassing broader delivery areas and enhanced visibility on the platform.

Despite these changes, restaurants operating under the basic 15% commission rate have not seen their rates altered. They retain the option to restore the 15% plans by notifying DoorDash.

However, the adjustments have sparked unease among some restaurant owners. Several reported that they were informed that adhering to the basic plan would lead to a reduction in delivery area coverage and an increase in customers’ delivery charges, effective from July 26.

While DoorDash emphasized that it had reached out to all merchants to inform them of these changes, critics argue that not all businesses received the notifications. Dean Kitagawa, owner of Wood Street Pizza, disclosed that he learned about DoorDash’s shift from Ben Fileccia of the Pennsylvania Restaurant & Lodging Association. Fileccia expressed concerns about the communication process, stating, “The reality is that most restaurants won’t receive this email because the recipient may believe it’s another promotional email, the email lands in a spam folder, or most likely, the email is delivered to an employee who may no longer be employed with the restaurant.”

Fileccia further criticized DoorDash’s opt-out process, describing it as unfair. He underscored that many small, independent, and minority-owned businesses might not be aware of the change or its implications.

The incident has also raised questions about DoorDash’s compliance with the city’s regulations. Anna Breece, director of policy and strategic initiatives for the Philadelphia Commerce Department, expressed concerns that DoorDash might not be adhering to the guidelines, prompting the department to consider further engagement with the company.

DoorDash’s move has highlighted the broader issue of delivery service fees in the restaurant industry. During the pandemic, as dining establishments turned to delivery and takeout, concerns arose about the high commissions charged by platforms like DoorDash, Grubhub, and UberEats. In response, Philadelphia imposed a fee cap of 15% in 2020, aimed at easing financial pressure on restaurants.

While DoorDash maintains that its actions are in compliance with the law, the situation underscores the ongoing challenges of balancing the interests of restaurants, consumers, and delivery platforms within the evolving food delivery landscape.

As the city and industry stakeholders continue to engage on this matter, restaurateurs like Dean Kitagawa must weigh their options carefully, potentially impacting not only their businesses’ bottom lines but also the dining experiences of their valued patrons.

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