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DoorDash, Grubhub sue San Francisco over permanent delivery fee cap

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Yahoo Finance’s Dani Romero reports the details and response to the lawsuit DoorDash and Grubhub have filed on San Francisco over the city’s permanent delivery fee cap.

Video Transcript

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- Delivery giants DoorDash and Grubhub are suing the city of San Francisco over delivery fee caps. The 15% cap, which was imposed soon after the pandemic began, have now become permanent. And you can bet that those delivery apps are fighting back. Yahoo Finance's Dani Romero here now with all the details. Dani?

DANI ROMERO: Yeah, so the city of Palm-- the city of San Francisco initiated this temporary policy to help restaurants during the pandemic, and the official fee cap was set to expire August 15th. Last month, during a board of supervisors meeting, they voted unanimously to make it a permanent change. So that means the city's cap prohibits all fees charged to restaurants by delivery companies can't exceed 15% of an order total. The app companies call the permanent price control unconstitutional, saying that without the fees, it would lead to fewer choices for restaurants, higher consumer prices, and could affect the services the companies offer in San Francisco.

- All right, so Dani, tell us what the response has been from some of those local restaurants, and from the city of San Francisco itself.

DANI ROMERO: Well, not everyone agreed to this permanent cap change. The mayor, London Breed, actually-- she recognized the negative [INAUDIBLE] the bill. I also spoke with restaurant owners in the Bay Area, and they have actually opted to not use these company-- these app companies no longer. One chef owner tells me, Kim [? Altor ?] says that these large companies coming in and taking such a high percentage off the top of a small restaurant that has [INAUDIBLE] margins was not beneficial, in the end, for both parties.

And we have seen these temporary delivery limits across the country during the pandemic, but San Francisco is the first in the nation to make this a permanent change. And New York City is also considering a permanent cap, too, according to the Wall Street Journal.

- All right. Lots more there. That story is to be continued for sure. Dani Romero, thanks so much for that.