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DoorDash and Grubhub ‘Pause’ Their Lawsuit Over SF’s 15% Delivery Fee Cap, Offer ‘Opt-In’ Compromise


DoorDash and Grubhub 'Pause' Their Lawsuit Over SF’s 15% Delivery Fee Cap, Offer ‘Opt-In’ Compromise

The dominant food delivery apps Gruhhub and DoorDash “have paused” their lawsuit over San Francisco’s 15% delivery fee cap, and instead pushing a compromise deal where restaurants can agree to pay more for better visibility in the app.

Like many a tech company, app-based food delivery services DoorDash and Grubhub were raking in the money during the pandemic, largely on the backs of other people’s goods and labor. And as the pandemic financially slaughtered the local restaurant sector, City Hall stepped in on behalf of the restaurants and temporarily capped delivery fees at 15% on those platforms barely a month into the pandemic. (DoorDash charged more on at least one occasion, blaming it on an “error.”) And Supervisors Ahsha Safai and Aaron Peskin passed legislation to make that 15% cap permanent in June 2021, drawing a lawsuit from Grubhub and DoorDash claiming the cap was unconstitutional.  

That lawsuit has just been “paused.” The Chronicle reports that DoorDash and Grubhub have agreed they would drop the lawsuit, but only if the Board of Supervisors agrees to a compromise measure that, in the Chronicle’s words, “would allow [restaurant] owners to opt out of the 15% limit and pay more for further promotion of their businesses by using the apps’ marketing services.”

In a statement to SFist, Grubhub says that “Grubhub appreciates the Board of Supervisors and Golden Gate Restaurant Association for working toward a reasonable legislative solution that supports restaurants, diners, and drivers. We have paused our litigation and are hopeful that the ordinance will be passed. Restaurants need more choices, not fewer, and this solution would preserve their ability to opt into important services including marketing, advertising, consulting and delivery.”

The compromise will go before the Board of Supervisors for a vote Tuesday.

“I hope this is a rare win-win-win between the restaurants, the delivery companies and the legislative process,” Golden Gate Restaurant Association executive director Laurie Thomas told the Chronicle. “I think there has to be a compromise for a good outcome.”

It’s fair to believe that when a tech company says “more choice,” they really mean “more options for us to screw the consumer.” But in this case, the Chronicle’s reporting found some unusual bedfellows.

Because the deal was apparently brokered with Uber, and some other surprising parties in the mix. “In recent months, the ride-hailing company, which operates food-delivery service Uber Eats and was not involved in the lawsuit against San Francisco, served as a go-between in behind-the-scenes talks among Thomas, city officials, and DoorDash and Grubhub.”

So wait a minute… Golden Gate Restaurant Association executive director Laurie Thomas also helped broker this deal she weighed in on “objectively” earlier in the article? Thomas does own Terzo and Rose’s Cafe, so it’s not unreasonable for her to be a point person (she says her restaurants are not taking the “charge me more than 15%” deal.)

But it seems pretty obvious to guess that any restaurant that does not take the deal will see their listings harder to find, which seems unfair. “I feel like they’re going to manipulate this,” Beit Rima owner Samir Mogannam told the Chron. “I would hope that the city would protect businesses as much as possible.”

We already know the pattern with third-party anything apps, that they feel it is better to ask for forgiveness than for permission. They will almost surely bury the listings of restaurants that want to stick with the lower fee. And that would probably spur a new set of likely legal challenges they’re pushing further down the road.

But if the supervisors approve this compromise Tuesday, the new ‘hybrid’ fee structure would take effect January 31, 2023.

Note: This post has been updated with comment from Grubhub.

Related: DoorDash Engineers Furious They Have to Deliver Food Once a Month [SFist]

Image: @querysprout via Unsplash

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