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File Number: 20-317 <br />market themselves, list their menu, receive orders online, and arrange for delivery or pickup, <br />allowing the businesses to offset the direct staff costs associated with these tasks. These food <br />delivery services are vital to our residents and businesses alike and the City wishes to encourage <br />their expansion. Even after in-restaurant dining is allowed to resume, it is expected that many <br />patrons will continue to rely on food delivery services due to individual comfort level and safety <br />concerns. <br />There are several fees associated with using the food delivery services, some paid by <br />the restaurant, and others paid directly by the consumer. These fees vary by company and a <br />number of different factors, including the service package that the business signed , whether the <br />order is placed on the delivery company or individual business’ website, whether delivery or pick <br />up is selected, the distance of delivery, and whether the restaurant is receiving additional <br />promotion or services. Total fees paid by restaurants typically range from 20%-30%. <br />Fees that companies charge restaurants typically include: <br />- Service Fee (sometimes called marketing or commission fee) - average 15% <br />o Sometimes called a marketing or commission fee, this is the fee that the delivery <br />company charges for the service of the transaction. This is typically a percentage <br />of the sale, which is utilized to cover the company’s direct costs, overhead, and <br />profit. If a restaurant selects a package with additional marketing or data sharing, <br />their fee will be higher. <br />- Delivery Fee - average 10% <br />o Both the restaurant and customer pay a delivery fee to go towards drivers’ wages; <br />these vary based on delivery length and order size. <br />- Credit Card Fee - average 3% <br />o Fee to cover credit card company’s processing fee and delivery company’s <br />fraud/loss protection <br />Fees that customers pay include taxes and delivery fees, as well as optional gratuity. <br />ANALYSIS <br />In response to the high service fees and resulting impact on local restaurants, cities in California <br />and the United States have put limits on the fees that food delivery companies may charge in an <br />effort to ease the burden on restaurants and other food businesses. <br />The City Attorney reviewed the matter and determined that the City, during the local emergency <br />because of the novel coronavirus pandemic, may place a temporary limit on the fees charged by <br />third-party food delivery companies. Under California Government Code Section 8634 and San <br />Leandro Municipal Code Section 3-4-130(a), the City Manager, acting as Director of Emergency <br />Services, is empowered upon the proclamation of a local emergency to make and issue rules <br />and regulations on matters reasonably related to the protection of life and property affected by <br />such emergency. <br />Clearly, San Leandro residents who are in the specific risk groups (persons 65 years of age or <br />older, immunocompromised, or who have specific health risks such as respiratory disease, <br />asthma, or heart conditions) currently and will most likely in the future rely upon food delivery, not <br />Page 2 City of San Leandro Printed on 7/1/2020 <br />456