Delivery Pains

We used to have chief executives but they have been gradually replaced by CEOs and many of the items we bought from retailers previously fell under the umbrella term FMCG but this has almost been superseded by the US equivalent CPG. Whether we like it or not we invariably end up adopting an endless stream of Americanisms. 

The food delivery companies including the big guns Deliveroo and Just Eat will be very much hoping we don’t also adopt some of the legislation that seems to be causing a growing headache for their counterparts and subsidiaries across the pond. New York’s City Council last week voted to approve legislation to make permanent the commission caps that were supposedly brought in temporarily during covid-19 to ease the burdens on hospitality companies. 

The present situation involves a 15% cap on fees charged by the delivery firms, as well as an additional 5% for advertising and 3% for transaction charges. This represents a significant reduction on the 30% commission level the large delivery companies had been charging many restaurants before covid-19.

Such a move follows similar action being implemented in San Francisco that has been leading the way in reducing the power of the delivery firms. Its council voted in June to keep a 15% upper fee limit in place and threw out the original plan that would have seen the cap removed 60 days after the city’s restaurants were allowed to reopen. 

Feelings have been strong among council supervisors and representatives. One stated: “We really have an imperative to protect independent restaurants from the exploitive and predatory practices of third-party food delivery apps that seek to extract wealth from our local economy.”

Such moves have cities across the US looking on with great interest to see how events work out. Those who introduced temporary caps include Los Angeles, Washington DC, Chicago and Seattle. Needless to say the delivery companies have stated their intent to vigorously fight the action on the basis that it is unconstitutional among many other gripes. 

At a time when companies such as Just Eat-owned Grubhub along with DoorDash and UberEats are fighting to achieve profitability on any half-legally recognised metric, such aggressive legislative moves are incredibly damaging. The same would be said for Just Eat in its core UK market and Deliveroo if Britain were to adopt such initiatives or something along similar lines. There will be a high level of comfort taken from the fact no such temporary caps have been introduced at any point in this country.

However, there is something else that has reared its head in the US and has potentially damaging consequences for the delivery companies within any country that has customer privacy high on its agenda (ie every country). Under a new bill approved recently in New York City the third-party delivery providers will have to share more customer data with restaurants. 

The legislation is the first of its kind to win approval in the US, and was part of a group of bills passed in late-July intended to yet again limit the power of third-party delivery companies. Under the bill, companies such as DoorDash, UberEats and Grubhub will be required to share customers’ names, phone numbers, email addresses, delivery addresses and order contents on a monthly basis with restaurants that choose to receive it. Customers will also be able to opt-out of sharing their data with restaurants.

This issue over who owns the customer relationship, and the unwillingness of the delivery firms to share any customer-related data whatsoever, remains one of the major bugbears for restaurants. It contributes greatly to the often fractious connection between the two camps. With access to customer details the hospitality companies would have the opportunity to incentivise these individuals to order via the restaurants’ own websites rather than going through the delivery company apps.

Although the delivery companies have so far enjoyed a continued level of buoyant order volumes despite the reopening of restaurants there looks to be few things on the horizon that suggest the landscape will get any easier going forwards. Sorry, I meant in the future.

Glynn Davis

Retail Insider