Philadelphia has become the latest city during the COVID-19 pandemic to levy restrictions on third-party delivery companies and their fees.
Third-party delivery companies are known for their powerful platform and marketing reach. But during the pandemic as restaurants struggle to survive largely or solely on off-prem, delivery sales are no longer incremental. The caps come as third-party delivery brands are consolidating: Just Eat Takeway and Grubhub and Uber and Postmates. Industry experts shared with HT where the future of third-party delivery is headed and what are the possible implications for restaurants.
The Philly law went into effect July 27 and contains three major components
1. Caps 3PD fees to 10% during the pandemic and 90 days after
2. Like the city of Chicago, Philly is requiring that third-party delivery companies make their cut transparent to customers.
3. Ban on unauthorized restaurant listings. According to the Philadelphia Inquirer, this was a problem pre-COVID-19 as some restaurants were listed on third-party delivery platforms unbeknownst to their owners, often with incorrect or outdated menus and prices.
This law prohibits third-party delivery services from using the name, likeness, trademark, or intellectual property of a restaurant without written permission to do so. There’s a $300 fine for any violations.
Other cities including New York, San Francisco and Chicago have put temporary caps on third-party delivery fees.