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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%

#71

Post by qeternity »

Me1000 wrote: post #60
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.

What? Nobody is obligated to use a delivery platform. What sort of nonsense is this?

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

#72

Post by qeternity »

spywaregorilla wrote: post #52
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.

You just made the point you were attempting to argue against. If the fees currently being charged aren’t even profitable for the delivery company, how on earth does it make sense to come in and push them down further?!?

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

#73

Post by yuliyp »

Me1000 wrote: post #60
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.

The restaurant is free to raise the menu price to compensate for a larger fee.

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

#74

Post by gnicholas »

qeternity wrote: post #70
gnicholas wrote: post #63

Earlier quoted context omitted.

Opaque fees that vary based on method of request annoy me in the same way that fees that only appear at the end of the purchase process. They affect my decision whether/how to order, and they cause me to spend time going down one path when I would have otherwise gone down another. I recall seeing discussion of how Yelp (I think?) was routing users to proxy phone numbers for businesses, and then charging them a referr…

These are not your fees. These are the fees the restaurants pay. All of their other fees are opaque to you. You have no idea what they pay for their raw ingredients, and why should you?

Raw ingredient suppliers do not charge restaurants a percentage of their sales, which is what these companies are doing. I don't necessarily think these fees should be capped, but I think it's worth considering whether they should be made more transparent.

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

#75

Post by bryanlarsen »

SllX wrote: post #66
gnicholas wrote: post #63

Earlier quoted context omitted.

Opaque fees that vary based on method of request annoy me in the same way that fees that only appear at the end of the purchase process. They affect my decision whether/how to order, and they cause me to spend time going down one path when I would have otherwise gone down another. I recall seeing discussion of how Yelp (I think?) was routing users to proxy phone numbers for businesses, and then charging them a referr…

Yelp was behaving in a morally if not legally fraudulent manner by having up until that point presenting their service not as a reservation system to the customer, but as a Yellow Pages. They didn’t say this is a number you can use to reserve through Yelp; they presented it as the business’s phone number, and without informing either businesses or customers that they changed up. Of course now they’re in the reservati…

> If it isn’t, raise them or close and do something else with your life.

They don't have that option. The contracts stipulate that delivery prices (before fees are subtracted) cannot be higher than the lowest price. So you can't charge 30% more for Uber Eats to cover the fee vs customer pick-up or dine-in.

In a fair market restaurants could negotiate the clause out of the contract, but of course nobody except the really large chains have any negotiating powers against Uber.

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

#76

Post by SllX »

bryanlarsen wrote: post #75
SllX wrote: post #66

Earlier quoted context omitted.

Yelp was behaving in a morally if not legally fraudulent manner by having up until that point presenting their service not as a reservation system to the customer, but as a Yellow Pages. They didn’t say this is a number you can use to reserve through Yelp; they presented it as the business’s phone number, and without informing either businesses or customers that they changed up. Of course now they’re in the reservati…

> If it isn’t, raise them or close and do something else with your life. They don't have that option. The contracts stipulate that delivery prices (before fees are subtracted) cannot be higher than the lowest price. So you can't charge 30% more for Uber Eats to cover the fee vs customer pick-up or dine-in. In a fair market restaurants could negotiate the clause out of the contract, but of course nobody except the rea…

That’s also not my business, but point of order: I know several businesses that do exactly this, where the price on DoorDash is about 15-20% higher than what I pay ordering in the restaurant.

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

#77

Post by dwaltrip »

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?

If the telephone company charged 20% of the order value whenever you ordered by phone, maybe you would find that relevant?

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

#78

Post by spywaregorilla »

qeternity wrote: post #72
spywaregorilla wrote: post #52

Earlier quoted context omitted.

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

You just made the point you were attempting to argue against. If the fees currently being charged aren’t even profitable for the delivery company, how on earth does it make sense to come in and push them down further?!?

As many are pointing out, this isn't about pushing prices down. They're free to raise prices as a way to take less from restaurants.

You're making an implicit assumption that these companies deserve to be profitable, or break even. But they don't, and they shouldn't be allowed to abuse their position as a platform to squeeze restaurants who don't have a lot of choice. Food delivery for low prices is not a sustainable business.

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

#79

Post by qeternity »

spywaregorilla wrote: post #78
qeternity wrote: post #72

Earlier quoted context omitted.

You just made the point you were attempting to argue against. If the fees currently being charged aren’t even profitable for the delivery company, how on earth does it make sense to come in and push them down further?!?

As many are pointing out, this isn't about pushing prices down. They're free to raise prices as a way to take less from restaurants. You're making an implicit assumption that these companies deserve to be profitable, or break even. But they don't, and they shouldn't be allowed to abuse their position as a platform to squeeze restaurants who don't have a lot of choice. Food delivery for low prices is not a sustainable…

This is an extremely naive view of economics, and not how things work in reality. If they raise fees on customers that will reduce customer demand, which in effect “takes” from restaurants.

Customers are price sensitive to the all in cost, not just the sub-total. Customers are paying for all of these fees in the end, irrespective of how they are charged.

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