Boston officials to restaurant delivery companies: Do something about your fees or we'll do it for you

Several city councilors and an aide to Mayor Walsh put delivery companies on notice today: Do more to help out restaurants and consumers by curbing fees during the pandemic or the city will impose fee caps as is being done in other cities.

An official with Grubhub - the only one of the four main delivery companies to agree to participate in a City Council hearing today - cautioned that if Boston wants a legal fight, it will get one, and besides, making the companies cap fees would actually increase consumer costs.

Several councilors accused the delivery companies - Grubhub, DoorDash, Postmates and Uber Eats - of essentially screwing restaurants that didn't do delivery before - restaurants the councilors said had had their knees knocked out by the closure of their dining rooms and are now losing money on deliveries made through the companies. They warned that without help on fees, restaurants might be forced out of business altogether by the fees.

"We're in a pandemic, we're in an economic recession," an angry Councilor Ed Flynn (South Boston, South End, Chinatown, Downtown) said. "I'm asking the delivery companies to be reasonable. They haven't been reasonable. They're not being a good neighbor," unlike locally owned restaurants whose owners are integral parts of their communities. He added, "When someone's down on their luck, down on the ground, you offer them a helping hand to get them back on their feet. ... You need to be a better neighbor."

Councilor Matt O'Malley (Jamaica Plain, West Roxbury) said that by capping fees, the companies would be helping restaurants - and he called on them to stop creating "ghost Web sites" for restaurants that don't have contracts with them to grab some of their business.

Kaitlyn Passafaro, director of policy of the Mayor's Office of Economic Development agreed that restaurants need a break from fees that threaten their ability to make money and so stay open. "This is unacceptable," she said.

John Schall, who owns the El Jefe Mexican restaurant in Harvard Square, and who was about to open one in the Little Building at Tremont and Boylston streets when the pandemic hit, said he is doing far more delivery business now, but he's losing money on deliveries due to delivery-company fees.

Schall pointed to a "support for super" program Grubhub ran last month - in which customers could get $10 off every order of at least $30 they made between 5 and 9 p.m. Sounds nice, but the restaurants were charged the $10 on top of their normal fees - which meant that on a typical order for him, he would only get 37% of his menu price, he said.

David Doyle, co-owner of three small restaurants in Jamaica Plain, said all had relied almost exclusively on in-restaurant diners before the current restrictions. After looking at the costs of orders with the delivery systems, he concluded it made little economic sense to sign up and so he's going to either have to figure out how do his own delivery or hope local people will continue to drop by the restaurants for pickup. "Why would I chose to have a relationship with Grubhub if it makes me no money?"

Amy Healy, director of public affairs at Grubhub, responded that the "30%" everybody keeps using as a figure for markup on restaurant deliveries doesn't mean the company is keeping all that money: Grubhub has bills to pay as well, for things from background checks on drivers and Google advertising to other marketing programs for restaurants. She said restaurants are typically charged about 10% of the order, consumers 20%.

She said that a cap would be "overreach" on the part of the city and said the company would not simply let its lawyers sit idly by. The company, she said, is not a public utility subject to regulation. She added it's not even a delivery service, because it connects restaurants, diners and independent-contractor drivers, rather than delivering the food itself.

Reducing fees would actually drive up costs because people would order less from restaurants and would mean drivers who now earn a living delivering meals would lose their jobs, she said, adding the company is hardly in the business of screwing restaurants - on whose survival the company depends. She said it recently made a $1.25-million contribution to the Boston-based Restaurant Strong Fund for restaurant workers, has pledged additional funds to support restaurants and, besides, lost money in the last quarter.

And nobody is forcing restaurants to sign up with Grubhub or its competitors - they can try to arrange alternatives or hire their own drivers - she said.

But Stephen Clark, vice president of government affairs at the Massachusetts Restaurant Association, said his members who don't have delivery contracts are particularly disturbed by the way the companies have taken to putting up faux sites that consumers find and then order through - sending drivers to pick up orders the restaurants did not know about and could not ask about such issues as allergies.

Healy agreed the practice is distasteful and said she'd be willing to to work with the association to figure out an alternative - but acknowledged that Grubhub now does it as well to keep up with its competitors.

"I think the alternative is not doing it because it's a duplicitous practice," O'Malley said, adding it particularly hurts restaurants owned by immigrants - and Boston has a lot of those - who may not even realize the services exist.

O'Malley asked Healy if the company is thinking of pulling out of New York City now that the city council there has passed an ordinance - which still requires the mayor's signature - to cap delivery fees at 15%.

Healy said the company is still considering its options there.O'Malley replied with a statement about the ordinance he is unlikely to ever use again: "If it's good enough for New York City ..."

The next step for the council's Committee on Small Business and Workforce Development is to hold at least one "working session" in which to draft a specific ordinance that could then go to the full city council for its vote.