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The use of food delivery apps surged during the pandemic. But for restaurants, the apps also presented a problem: fees as high as 30% cut deeply into the restaurants’ already thin profit margins
The use of food delivery apps surged during the pandemic. But for restaurants, the apps also presented a problem: fees as high as 30% cut deeply into the restaurants’ already thin profit margins
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The use of food delivery apps surged during the pandemic. But for restaurants, the apps also presented a problem: fees as high as 30% cut deeply into the restaurants’ already thin profit margins
On Thursday at Pandora Avenue’s Virtuous Pie, Ravi Kahlon, Minister of Jobs, Economic Recovery, and Innovation, announced that the province is introducing legislation that would see a temporary food delivery fee cap become permanent.
The legislation will allow the provincial government to continue to cap fees for delivery companies and what they charge restaurants for their services. Fees will be capped at 20% of the value of an order.
This cap is crucial for businesses still recovering from the pandemic whose businesses increasingly serve customers through delivery, said Ian Tostenson, president and CEO of BC Restaurant and Foodservices Association.
Before the pandemic, delivery was only about 15% of the restaurant industry; once the pandemic hit, that percentage rose to over 80%, according to Tostenson. Now, he said, delivery makes up about 25 to 30% of restaurants’ business.
The temporary cap was first introduced in December of 2020 as part of the Emergency Program Act. This was in response to delivery services charging restaurants as much as 30% of the cost of an order. The cap was set to expire on Dec. 31.
“Before the fee cap was in place, it was always a little bit uncertain on how long we could continue to provide the service,” said Kelsey McInnes, general manager of Virtuous Pie, adding that the fee cap helped them continue to provide delivery. She says delivery remains 40 to 45% of the restaurant’s business.
The legislation would also include protections for delivery drivers to make sure their compensation does not decrease as a result of the cap.
Even food delivery apps with low fees have taken big bites out of BC restaurants, however: this summer, restaurants across Victoria went public with accusations that local app Tutti owed hundreds of thousands of dollars it had collected on behalf of restaurants.
Since March 2020, restaurants and bars have had to readjust and, at times, close due to changing COVID-19 public health restrictions. It took its toll on the businesses—many had to lay off staff, and now many are struggling to recruit and retain workers. Capital Daily wrote about the industry-wide labour shortage earlier this year.
—With files from Ryan Hook
