Will Delivery Apps Make "Executive Order Fees" The New Normal?

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By  Jacob Dean

At the height of the COVID-19 outbreak (which admittedly hasn't ended yet) a number of cities across the U.S. passed legislation capping the fees that food delivery apps can charge to participating restaurants. Uber Eats quickly found a way to circumvent the cap: in May, customers in Jersey City, New Jersey noticed a rather pernicious charge attached to their orders.

While this fee—a flat $3—might not seem like that big of a deal, it's important to consider what it represents. The point of the fee isn't solely to "help keep delivery drivers on the road." By explicitly informing customers that these fees exist because of new legislation, Uber is deliberately trying to make people unhappy with the executive order, potentially influencing the way its customers vote. These fees currently seem to be in place only in Jersey City, but it's reasonable to assume that Uber will gather data about the fees (and the public's reception to them) to determine whether to levy similar fees in other markets, if and when the company faces restaurant fee caps in those cities.

You might ask: Why don't businesses simply opt out of using Uber Eats? It's important to consider the role that delivery apps play in the restaurant industry. Customers have been so effectively trained to use apps for food delivery that if a restaurant chooses not to partner, many people simply won't look outside of the app to see what their options are. This puts restaurants in a position where they have to choose between doing work for almost no profit or simply missing out on the income entirely. Plus services like Seamless, Postmates, Grubhub, and DoorDash have been adding restaurants into their networks without their permission. When a restaurant refuses to participate and the service lists it anyway, opting out isn't exactly an option.

It remains to be seen whether these fees will stay in place in Jersey City, whether they'll spread to new cities and states, and whether they'll be adopted by other delivery companies. Keep an eye on your food delivery total, and don't be surprised if you see it grow higher.

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