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CITY OF HUNTINGTON BEACH
CITY COUNCIL MEETING—COUNCIL MEMBER ITEMS REPORT
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: NATALIE MOSER, COUNCIL MEMBER
DATE: FEBRUARY 1, 2021
SUBJECT: CONSIDER DIRECTING STAFF TO PREPARE A TEMPORARY ORDINANCE THAT
LIMITS THE FEES PAID BY RESTAURANTS TO THIRD PARTY DELIVERY SERVICES
DURING THE COVID-19 PANDEMIC
The COVID-19 crisis has placed extreme financial pressures on restaurants, due in large part to
the restrictions that have been placed on indoor and outdoor dining. As such, restaurants have
had to rely heavily on third party delivery apps such as Postmates, Grubhub, DoorDash and Uber
Eats to generate sufficient revenue to stay in business and keep staff employed.
These third party apps require restaurants to pay high delivery fees that can at times exceed 30%
of the cost of each order. Some restaurants pay these fees directly,which reduces their operating
margins, while others have had to increase menu prices, which discourages potential customers.
Noting that restaurants have been disproportionately impacted during COVID-19, several cities
have adopted temporary ordinances to limit the fees that third party apps can charge restaurants
during the pandemic. For example,the City of Los Angeles implemented fee caps of 15% and 5%
for delivery and non-delivery fees that restaurants have paid. Further, the Los Angeles
regulations also mandate that 100% of tips go directly to the drivers.
Other cities that adopted similar measures in California include Alhambra, Palm Springs, and San
Francisco. Of note, these measures are temporary and are set to expire upon the end of the
pandemic or the lifting of indoor dining COVID-19 restrictions, whichever comes first.
I believe a similar ordinance in Huntington Beach is necessary to support our struggling restaurant
industry, which is a major contributor to the vibrant economy that our City is well known for.
Many of our restaurants have had to reimagine their business models and incur unforeseen
expenses to comply with COVID-19 health and safety guidelines. By instituting a temporary cap
on the fees that third party apps can charge our restaurants, the City can help alleviate some of
the COVID-19 burden that our restaurants have had to face of late.
RECOMMENDED ACTION
I recommend that the City Council direct staff to prepare a temporary ordinance that places a
15% cap on fees paid by restaurants and a 5% cap on non-delivery fees paid by customers until
current COVID-19 restrictions on both indoor and outdoor dining are lifted.
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