Profit margins are already thin for restaurants, said 1st Ward Councilman Sean Dunne during the Jan. 25 City Managers session, made only skinnier by high user rates charged by third-party food delivery services such as DoorDash, Grubhub, Uber Eats and others.
These services charge a commission, sometimes as high as 30%, where a portion of profits made by selling food products ends up in their hands instead of the restaurants.
“If you’re selling a hamburger for $10, you’re only making so much profit of that $10 and then comes in a company that takes 30% of that,” he said. “You’re just about breaking even.”
To help restaurants that have become increasingly reliant, Dunne proposed legislation where a 15% commission rate would be set. On Monday, it will be discussed during the City Managers session where it could then be moved to the council agenda.
Dunne saw the benefit of such a city action as two-pronged, helping both restaurants and the public health mission of slowing the spread of the virus.
“Those that are feeling uneasy about dining-in at a bar or restaurant, this now provides you with the option that’s more beneficial to local restaurants,” he said, the businesses he had already reached out to signaling support.
Portsmouth Area Chamber of Commerce Executive Director Lisa Carver, when asked on Friday, said she saw this as a win for the restaurants that have been hurting during the pandemic.
“People are getting more accustomed to using these services, which before now weren’t really available in our area,” she said in a phone interview, where the chamber lists over 35 restaurants, food, and beverages member businesses on its website. “I understand what City Council is trying to do and, obviously if it will help restaurants and small businesses, I think it’s a good move.”
2nd Ward Councilwoman Charlotte Gordon saw this proposal as a boost to these businesses and one with her backing. She and the rest of council voted to move the item into the City Managers Agenda.
“One of the beauties of Portsmouth is that so many of the businesses are locally owned, but that also means that they’re in it by themselves without the help of a larger chain,” she said. “Any help we can give them would be supported.”
Dunne added in a Friday interview that the 15% limit would apply to both local and chain restaurants in the city limits as long as they use these delivery services.
Any potential legislation would be based on action taken by Columbus City Council last November, where the 15% cap was set for 120 days after all pandemic restrictions have been lifted. It also does not permit the delivery services from reducing pay or garnish tips from their delivery drivers in response to the fee cap.
“Exorbitant delivery fees being sent to out-of-state corporations just make no sense when our local businesses are fighting so hard to keep up during this pandemic,” said President Pro Tem Elizabeth Brown when announcing the council’s decision on Nov. 20. “Capping those fees protects not only the restaurants who feed our residents but also the workers who make them run, by also ensuring delivery driver pay and gratuity is protected under the new fee cap.”
Dunne added he was unaware of any of these services leaving Columbus due to the legislation. Similar forms of legislation have been passed in Cleveland, Chicago and San Francisco.
“We’re hearing this phrase, “we’re all in this together,” and I think this would help demonstrate that,” he said. “We’re thankful for those services that can provide that delivery, but also we want to ensure that restaurants can survive through this.”
It has not been a matter of survival for the delivery services.
Due to increased use for their offerings, DoorDash reports that its revenue grew significantly through the first nine months of 2020 when compared to that same period in 2019. According to its initial public offering release, DoorDash’s revenue hiked from $587 million in 2019 to $1.9 billion last year.
Reach Patrick Keck (740)-353-3501 ext. 1931, by email at firstname.lastname@example.org, or on Twitter @pkeckreporter.
© 2020 Portsmouth Daily Times, all rights reserved.