Minneapolis makes permanent caps on third-party food delivery fees

With pandemic emergency regulations soon expiring, the Minneapolis City Council voted last week to make permanent a cap on the commission fees charged to restaurants by food delivery companies such as Uber Eats, Grubhub, DoorDash and Bite Squad.

The ordinance, which was crafted by Council Member Lisa Goodman, limits fees to 15% or less and also makes it unlawful for delivery companies to charge higher fees for additional services, like advertising or order placement, without consent from restaurants.

"This is really an attempt to help small independent restaurants in Minneapolis survive," said Goodman, who represents the Seventh Ward, which includes much of downtown and part of Uptown, home to many restaurants. "Since there's an emergency regulation in place already, it just extends the emergency regulation, so nothing will change for the consumer."

In December 2020, the city first imposed a fee cap to help restaurants hit hard by the COVID-19 pandemic stay afloat. That emergency order is slated to expire in February and city officials said there's urgency to make the caps – which have become common in many cities across the country – permanent as restaurants and customers continue to rely heavily on third-party food delivery apps.

Restaurant owners and businesses that support the ordinance said the caps have allowed them to hire and pay more staff. Some small restaurants raised concerns that once the emergency order was lifted, companies would resume charging them 30% for services, making it difficult for them to turn a profit.

"Capping [delivery companies] levels the playing field … Everybody has to play by the same rules," said Sam Turner, owner of the Nicollet Diner and Muffin Top Cafe in Minneapolis, who asked the council to make the fee caps permanent. "It will definitely go a long way to helping small, independent operators."

Food delivery companies and national lobbyists are pushing back, saying the price controls can raise prices for consumers, which in turn can reduce orders for restaurants, and diminish earning opportunities for drivers. Uber Technology, and its food delivery service app Uber Eats, said in a letter to the City Council that the permanent regulations "would make it difficult, if not impossible" for them to do business in Minneapolis.

In a statement to the Star Tribune, DoorDash called the ordinance an interference that's "detrimental to local economies" and a violation of the U.S. and Minnesota constitutions. DoorDash is among the major food delivery companies that have sued New York City and San Francisco for making the pandemic fee regulations permanent.

"These controls will likely harm the customers, delivery drivers, and the very restaurants policymakers hope to support," the company's spokeswoman Briana Megid said.