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San Francisco permanently caps delivery app fees for restaurants at 15%

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Re: San Francisco permanently caps delivery app fees for restaurants at 15%

#51

Post by gnicholas »

SheinhardtWigCo wrote: post #38
dreyfan wrote: post #18

This is irrelevant. The delivery companies will just increase the prices of the items, or charge Service Fees, or charge Temporary Local Fees, or charge Taxes. UberEats does exactly this in each of those transactional labels already. And let's not forget the driver tip which often defaults to a percentage of the sum() of the above items.

DoorDash charges a $1 to $2.50 “Regulatory Response Fee”, explained as follows: > A local regulation has temporarily capped the fees that we may charge local restaurants. To continue to offer you convenient delivery while ensuring that Dashers are active and earning, you will now see an additional fee that we are charging for local orders in this area. Mission accomplished, everyone!

If DoorDash did something similar to this in response to this proposed rule, it would actually be useful because it would make the system more transparent. As it is now, customers have no idea how much restaurants are being charged by DoorDash. If they kept 15% and then created a new explicit customer-facing fee (as allowed by the proposed rule), then at least customers would know how much of their money is going where.

The only downside is they might be misled into thinking that the new rule caused the fee, when in reality it only caused DoorDash to divide it up and make part of it explicit.

Re: San Francisco permanently caps delivery app fees for restaurants at 15%

#52

Post by spywaregorilla »

fairity wrote: post #5

If these fees are truly overbearing, wouldn’t you expect new competing delivery services to undercut incumbents? The delivery space seems very competitive already which leads me to believe that the fees are representative of high operational costs

Not if these companies are willing to price so low they run at a loss.

Re: San Francisco permanently caps delivery app fees for restaurants at 15%

#53

Post by qeternity »

gnicholas wrote: post #44

Lots of the commenters seem to think (as I did before reading the article) that this is capping how much delivery services can charge the customer, but it's actually about how much they can charge the restaurants. This distinction actually makes some sense because the former is explicit and the latter is hidden. I don't love delivery fees and practically never have food delivered, but I would not want to see the cust…

> This distinction actually makes some sense because the former is explicit and the latter is hidden.

Hidden to whom? The customer? Why does that matter?

If I phone a restaurant and place an order, is their telephone rate of any concern to me? Or their electricity rate? What relevance does this have?

Re: San Francisco permanently caps delivery app fees for restaurants at 15%

#54

Post by Me1000 »

SheinhardtWigCo wrote: post #38
dreyfan wrote: post #18

This is irrelevant. The delivery companies will just increase the prices of the items, or charge Service Fees, or charge Temporary Local Fees, or charge Taxes. UberEats does exactly this in each of those transactional labels already. And let's not forget the driver tip which often defaults to a percentage of the sum() of the above items.

DoorDash charges a $1 to $2.50 “Regulatory Response Fee”, explained as follows: > A local regulation has temporarily capped the fees that we may charge local restaurants. To continue to offer you convenient delivery while ensuring that Dashers are active and earning, you will now see an additional fee that we are charging for local orders in this area. Mission accomplished, everyone!

The snark seems misplaced. This regulation is not about making food delivery cheaper for customers, it's about making sure the restaurants are able to maintain enough margin to stay in business, a notoriously difficult business at that.

Let's assume DoorDash was charging 30% (as was mentioned in the article), on a $30 food order DoorDash would take $9 of that from the restaurant.

I'm happy to pay an extra $2.50 if my local restaurant gets to keep that extra $4.50.

Re: San Francisco permanently caps delivery app fees for restaurants at 15%

#55

Post by rsj_hn »

jdavis703 wrote: post #37

The article answers a lot of questions raised in the comments. Delivery apps are free to continue charging consumers unlimited delivery fees, service charges, etc. What changes is they can’t charge restaurants more than 15% commission.

What many people on HN realize is that whoever collects a tax is not the same as who bears the burden of the tax. It makes zero difference whether money is collected from restaurants or patrons. Both restaurants and patrons bear the tax and the proportion born by each is a function of substitutability ratios. It is not a function which of the two pays a fee. If 100% of the money collected from restaurants were to be shifted to being collected from patrons, restaurants would not and will not save money from this shift.

The very basic concepts of tax incidence or things like the law of supply are unfortunately mysteries that appear to be forever hidden from journalists and government workers.

Re: San Francisco permanently caps delivery app fees for restaurants at 15%

#56

Post by unexpected »

qeternity wrote: post #53
gnicholas wrote: post #44

Lots of the commenters seem to think (as I did before reading the article) that this is capping how much delivery services can charge the customer, but it's actually about how much they can charge the restaurants. This distinction actually makes some sense because the former is explicit and the latter is hidden. I don't love delivery fees and practically never have food delivered, but I would not want to see the cust…

> This distinction actually makes some sense because the former is explicit and the latter is hidden. Hidden to whom? The customer? Why does that matter? If I phone a restaurant and place an order, is their telephone rate of any concern to me? Or their electricity rate? What relevance does this have?

well, for starters, their telephone rates and electricity rates don't vary on the price of the order.

Re: San Francisco permanently caps delivery app fees for restaurants at 15%

#58

Post by spywaregorilla »

The interesting thing here is that, while delivery platforms still hold power, they're significantly less poewrful than walled garden tech platforms like Apple's app store, and operate at significantly worse (negative) margins to run the platform. I'm hoping a great deal of near term regulation is about limiting platform holder profitability.

Re: San Francisco permanently caps delivery app fees for restaurants at 15%

#59

Post by tengbretson »

What they really need is to form a new committee to do industry and community research on an ongoing basis so that they can fine tune this percentage over time. Obviously they'd need to meet on a bi-weekly basis, maybe get a little catering because come on, it's 6:30 on a weeknight!

Re: San Francisco permanently caps delivery app fees for restaurants at 15%

#60

Post by Me1000 »

yuliyp wrote: post #20

This doesn't actually do anything meaningful. It changes the proportion of the fees that are visible to the consumer, but the fees will still be there. They'll show up as regulatory fees or just service fees. At the end of the day someone needs to pay for the delivery service (both the actual delivery, as well as the support infrastructure around it, as well as the platform).

It's pretty meaningful if you're a low margin restaurant. This was never about bringing costs down for customers, it was about protecting local businesses.
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