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File Number: 20-337 <br />customers will come to dining rooms once they are able to reopen. Others noted that they recoup the <br />delivery fees by raising their prices. <br />City staff also reached out to several of the food delivery companies to learn more about how and why <br />their fees are charged, the impact of a fee cap, and what they are doing to assist businesses during <br />these difficult times. The companies shared that they are struggling with the fee limits that have been <br />placed in other cities, with some alleging that they are not legal. They generally stated that the fees are <br />high to cover their costs and overhead, and on driver pay, with one company citing that they are <br />operating at a 40% loss under a 15% fee limit. <br />The food delivery companies noted that they offset reduced fees by passing more delivery costs on to <br />the customer, providing less marketing to restaurants, stopping service to harder-to-reach delivery <br />areas, reducing their own workforce, and reducing driver pay. They also noted that when they do pass <br />more delivery costs to customers, they see fewer overall orders and/or smaller orders, which in turn <br />reduces the take-home pay for drivers, with one company noting a 10% reduction in pay to drivers in <br />San Francisco. <br />In response to the challenges that restaurants are facing, the delivery companies have provided various <br />fee reductions and other forms of assistance. This includes no cost to sign up for service, no fees for <br />pickup orders, assistance in creating restaurant pages, and providing daily payout of order proceeds <br />(rather than weekly/monthly). Support activities for drivers include providing personal protective <br />equipment, paid sick/quarantine leave, and in some cases, limited medical benefits. They are also <br />doing various marketing programs and promotions to help increase restaurant orders, such as no <br />delivery fees on Saturdays, reduced delivery fees for local restaurants and Black-owned restaurants, <br />and helping restaurants to optimize their options to include what customers most want. Some are also <br />providing means for customers to donate to restaurants or are creating funds to assist restaurants and <br />drivers. <br />Several food delivery companies are also actively working with cities and Chambers of Commerce <br />where they operate, such as San Jose and Oakland, to develop specific programs for restaurants in <br />that community. The companies have expressed openness to continued conversations about how they <br />can work to assist restaurants in San Leandro and City staff will continue these discussions in the <br />coming weeks. <br />City staff have surveyed other communities in the area, and have found that while some cities have <br />enacted a fee limit, others have considered it and decided not to impose a cap, and others have not <br />had a formal discussion on the matter at this time. <br />- California jurisdictions that have imposed a limit include: <br />o San Francisco, Los Angeles, Marin County (unincorporated areas), Santa Cruz, Santa <br />Monica, Glendale <br />- California jurisdictions that have considered a limit but have not implemented one include: <br />o San Jose, Sacramento, Oakland <br />(Note these lists are based on information staff have been able to gather and are not <br />exhaustive) <br />The following are typical fee limit terms in the Bay Area: <br />1. Fee Limit - Typically ranges from 10-20% of the total order cost, with most at 15%. Note- the <br />City may also be able to specify which types of fees are limited, such as service fees rather <br />than delivery fees. <br />2. Applicability - For many cities, the fee limit only applies to small food establishments (with 5 or <br />fewer locations). <br />3. Timeframe - The fee limits typically end when restaurants are permitted to offer dine-in service. <br />Page 3 City of San Leandro Printed on 7/15/2020 <br />358