May 12, 2020
Beginning May 22, third-party delivery services such as Grubhub and Uber Eats will be required to disclose the fees charged to restaurants for their services.
Promoting “transparency” as imperative amid the limitations of social distancing mandates, Chicago Mayor Lori Lightfoot claimed elevated fees further handicap restaurants already struggling to stay afloat. According to Lightfoot, customers care to know how their transactions affect restaurant owners.
“I think the average customer who’s ordering wants to know what the actual payment is, what the fee is gonna be for the restaurant,” said Lightfoot Tuesday morning.
“And if a delivery service is taking what I think some have alleged, which is an inordinate amount of the fee, making it difficult for restaurants to be able to earn what are already very tight margins, I think the average consumer wants to know that and is going to act accordingly on the basis of that information.”
Many restaurants elected to permanently shutter their doors amid Illinois’ stay at home mandate.
Pepe’s Mexican Restaurant, a staple of Norridge, Ill., posted a letter on its door thanking consumers for their loyal patronage. The popular establishment decided against reopening amid uncertainty surrounding Illinois’ reopening plan.
Representatives of Steak N’ Steak announced the restaurant chain’s intention to close 57 locations across the United States, accounting for nearly 10% of its nationwide presence.
The Illinois Restaurant Association endorsed Lightfoot’s decision to mandate disclosure of delivery service fees.
Services such as Grubhub and DoorDash often charge commission fees atop actual delivery fees, oftentimes exceeding 30% of the listed menu price. The “inordinate fees” sometimes negate consumer efforts to assist local businesses amid the novel coronavirus COVID-19 pandemic.
In March, Chicago Pizza Boss owner Giuseppe Badalamenti shared a statement from Grubhub that showed the third-party delivery service deduct approximately 64% of the $1,042.63 worth of food ordered by customers.
?Stop believing you are supporting your community by ordering from a 3rd party delivery company Out of almost $1,100…
Posted by Giuseppe Badalamenti on Wednesday, April 29, 2020
Grubhub charged Badalamenti a $206.51 commission fee atop a $94.99 delivery commission fee. Other modifications included a $38.52 processing fee, a $231.00 promotions deductions and a “seven-order adjustment” subtraction worth $131.19.
“Stop believing you are supporting your community by ordering from a 3rd party delivery company,” Badalamenti said in a Facebook post.
According to Lightfoot, the city’s novel set of rules will provide customers with a greater understanding of the financial forfeitures restaurants encounter when dealing with third-party delivery apps.
A statement from the mayor’s office reads, “These first-in-the-nation rules will provide customers with the details they need to make fully-informed purchasing decisions.”
Violating the new law can result in a daily fine between $500 and $10,000, according to Lightfoot’s office.
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