10A Action 2020 0706 - Laserfiche WebLink

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File Number: 20-317 to mention those who care for such individuals, or do not want to contract the virus. Therefore, based on the City Manager’s broad authority during a local emergency, the precedence set by other jurisdictions, the desultory threats of litigation from the food delivery app industry, and San Leandro’s market size, the threat of legal challenge to such a policy is low. However, based on staff conversations with the food delivery app businesses, if such a fee extended into when public health orders removed prohibitions on indoor dining, legal risks would increase. There is an obvious balance of such risks against continuing harm to local businesses wrought by high fees. City and San Leandro Chamber of Commerce staff have reached out to restaurant and other food businesses to gain feedback on their experience with food delivery companies and their fees. The businesses find that the delivery company fees are onerous and make it hard for them to make a profit. However, they also find that the delivery service is valuable and are generally not considering cancelling. Many find the delivery companies to be a necessary part of doing business and keeping their business alive during the shelter-in-place. Some also noted that they understand that part of what they are paying for is the marketing of their businesses and keeping customers ordering, with the hope that delivery customers will come to dining rooms once they are able to reopen. Others noted that they recoup the delivery fees by raising their prices. City staff also reached out to several of the food delivery companies to learn more about how and why their fees are charged, the impact of a fee cap, and what they are doing to assist businesses during these difficult times. The companies shared that they are struggling with the fee limits that have been placed in other cities, with some alleging that they are not legal. They generally stated that the fees are high in order to cover their costs and overhead, and on driver pay, with one company citing that they are operating at a 40% loss under a 15% fee limit. The food delivery companies noted that they offset reduced fees by passing more delivery costs on to the customer, providing less marketing to restaurants, stopping service to harder-to-reach delivery areas, reducing their own workforce and reducing driver pay. They also noted that when they do pass more delivery costs to customers, they see fewer overall orders and/or smaller orders, which in turn reduces the take-home pay for drivers, with one company noting a 10% reduction in pay to drivers in San Francisco. In response to the challenges that restaurants are facing, the delivery companies have provided various fee reductions and other forms of assistance. This includes no cost to sign up for service, no fees for pickup orders, assistance in creating restaurant pages, and providing daily payout of order proceeds (rather than weekly/monthly). Support activities for drivers including providing personal protective equipment, paid sick/quarantine leave, and in some cases, limited medical benefits. They are also doing various marketing programs and promotions to help increase restaurant orders, such as no delivery fees on Saturdays, reduced delivery fees for local restaurants and Black--owned restaurants, and helping restaurants to optimize their options to include what customers most want. Some are also providing means for customers to donate to restaurants, or are creating funds to assist restaurants and drivers. Several food delivery companies are also actively working with cities and Chambers where they operate, such as San Jose and Oakland, to develop specific programs for restaurants in that community. The companies have expressed openness to continued conversations about how Page 3 City of San Leandro Printed on 7/1/2020 457