B.C. extends cap on delivery company fees charged to restaurants

·3 min read
A food delivery service employee rides his bicycle in downtown Vancouver. Restaurant owners want tighter regulation on multinational third-party delivery apps like Doordash, SkipTheDishes and UberEats. (Ben Nelms/CBC - image credit)
A food delivery service employee rides his bicycle in downtown Vancouver. Restaurant owners want tighter regulation on multinational third-party delivery apps like Doordash, SkipTheDishes and UberEats. (Ben Nelms/CBC - image credit)

The province has extended a cap on fees that third-party delivery apps charge restaurants — but restaurant owners say they want stiffer regulation to stop delivery apps from controlling the market.

B.C. enacted the cap in December last year, with delivery apps like Doordash, Uber Eats, and SkipTheDishes only allowed to charge restaurants 15 per cent of a customer's total order for their services.

An additional cap of five per cent was set on other fees, such as processing.

The order was set to expire on Tuesday but has now been extended to Dec. 31, at which point it will be reviewed again with COVID-19 restrictions taken into account.

Ravi Kahlon, minister of jobs and economic recovery, said restaurants he had heard from were breathing a sigh of relief at the extension.

"We saw that the fees were continuously being increased on small businesses, in particular restaurants," he said. "This was a measure that we were forced to take to ensure that our businesses survive through this pandemic."

Ian Tostenson, president of the B.C. Restaurant and Foodservices Association, said he was happy with the extension but would prefer if the caps were made permanent.

"At 20 per cent, the restaurant can make a bit of money. At 30 per cent, the restaurant's making no money ... I hope the province realizes on Jan. 1, we're still going to be in a tough situation and that they will extend it, hopefully permanently," he said.

'Oligopoly'

But some in the industry say the cap doesn't stop delivery apps from charging hidden fees.

"They play with everyone that's in there, whether it be a restaurant, a consumer, or driver," said Brandon Grossutti, owner of Pidgin Restaurant in Vancouver's Gastown neighbourhood.

"They have unlimited capital to basically make sure that they keep their market share."

Though the order stipulates that delivery apps cannot dock delivery drivers' tips to make up for the lost revenue, there is no mention of other fees.

One service, SkipTheDishes, charges a 99-cent "B.C. fee" on every order.

Grossutti says restaurants have taken to marking up their prices within apps to make up for the lost revenue, and that drivers end up working against each other due to the apps' business models.

He's set up a local delivery alternative called FromTo for restaurants in Metro Vancouver, in which drivers are paid a flat fee. So far, he says around 70 restaurants and more than 600 drivers have signed up, but it's been tough to compete against global companies backed by venture capital.

"There needs to be some form of regulation to make sure that it's fair ... [the government] needs to find ways to have viable alternatives that can actually compete with these third-party multinationals," he said.

Winston Szeto/CBC
Winston Szeto/CBC

Tostenson said delivery prices might go up for consumers even further if third-party delivery apps continue to dominate the market.

He likened the current situation to an oligopoly, a situation where a few companies exert undue control over an industry to ensure lesser competition.

"I'm not one that advocates a government setting prices, but it's such an oligopoly that small businesses can't get in," he said.

CBC News contacted SkipTheDishes and Doordash for comment but has yet to receive a reply.

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