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Daily news and analysis about the food tech revolution

Postmates

Updated: California Judge Orders Uber and Lyft to Reclassify Drivers as Employees

UPDATE: Uber CEO Dara Khosrowshahi said the company would probably shut down operations in California temporarily if this week’s ruling is not overturned. However, that would only apply to the company’s rideshare business. An Uber spokesperson confirmed to Eater that the company “has no plans to cease California operations of Uber Eats.”

PREVIOUSLY:

A California judge late Monday ordered that Uber and Lyft must reclassify their drivers as employees. This preliminary injunction is stayed for 10 days, during which time Uber and Lyft can file an appeal. Both companies have said they will do so.

This week’s order comes after California Attorney General Xavier Becerra and city attorneys in California sued Uber and Lyft in May for allegedly treating their workers as contractors. The suit alleged that these companies were in violation of AB5, which went into effect in January of this year. Under the law, gig economy workers (including food delivery couriers and drivers) must be classified as employees and given access to benefits like sick leave, unemployment, and workers comp.

Uber, Lyft, and other gig worker companies have already funneled substantial resources into challenging AB5. In December of 2019, Uber and Postmates filed a complaint (which was later rejected) alleging the law violates constitutional rights. DoorDash, along with Uber and Lyft, has vowed to spend millions to get a ballot measure in 2020 that would counteract AB5. And these tech companies have argued ad nauseam that their workers want to be independent contractors and that their services are exempt from the law on the grounds that they are platforms, not transportation companies. 

California Superior Court Judge Ethan Schulman wrote in this week’s ruling that such logic “flies in the face of economic reality and common sense… To state the obvious, drivers are central, not tangential, to Uber and Lyft’s entire ride-hailing business.”

That third-party food delivery services stand on the same side of the AB5 argument as rideshare companies is no surprise. The third-party delivery model relies on workers to transport food from restaurants to customers’ homes. Having to pay workers things like health benefits and paid sick leave would undercut the entire third-party delivery model, adding extra costs for the likes of Uber and DoorDash, and ultimately slowing their still-elusive path to profitability. 

Uber went as far as to say that if this week’s injunction stands, it may have to exit California. Assuming that would apply to both its rideshare business and its Eats operation, that would erode the company’s recent deal to acquire Postmates, a service that’s most popular on the west coast. 

No other state has yet moved so aggressively to get gig workers reclassified. But thanks to COVID-19, much light has been shed on workers’ access to things like health benefits or even paid sick leave and unemployment during a global crisis. In March, a New York Court ruled that Postmates couriers are employees and therefore eligible for unemployment. In the same month, Instacart revamped its benefits for drivers after workers threatened to strike.

You can read this week’s ruling in full here. If it stands, and Uber and Lyft are unsuccessful in their appeals, the order could have a ripple effect across other states in the U.S.

Postmates Now Delivering Dodger Stadium Food to LA Doors

Dodger fans now can change up “Take Me Out to the Ball Game” with some new lyrics:

Take a walk down my hallway
Take a seat on the couch
Postmates and Dodgers now deliver snacks
Just in time now that baseball is back

Baseball fans may be stuck at home, but if you’re rooting for the Dodgers in LA, you can still eat like you’re at the stadium. Postmates announced earlier this week that has partnered with Home Plates to offer home delivery of Dodger Stadium food.

From a Postmates blog post describing the program:

Home Plates will serve Dodger Stadium fan-favorites like Dodger Dogs, micheladas, and garlic fries to go along with snacks, salads, bar, and dessert options. In addition to premium Dodger Dogs, items specially produced by Home Plates include individual thin-crust Brooklyn-style pizza, carne asada helmet nachos, and Dodgers’ blue gelato. Also, check out the family party pack and catering options.

Right now, delivery is only available in the Hollywood and West Hollywood neighborhoods of Los Angeles, with plans to expand to other areas of the city. Hollywood and West Hollywood, of course, are also the neighborhoods where Postmates uses its Serve robot to make deliveries. So your Dodger Dog may be brought to you by a cute robot!

This isn’t the first deal between Postmates and the Dodgers. Last year, the two teamed up for online ordering and food pickup inside Dodger Stadium. But with stadiums shut down, this is the next best thing for those wanting more of a realistic baseball experience while watching the games at home.

Postmates was recently acquired by Uber for $2.65 billion, which could buy a lot of peanuts and cracker jacks.

I say this without judgment, but given the greasy nature of stadium food, I’m curious as to how well it will travel for delivery. Obviously, downing a Dodger Dog on your recliner at home is a lot different from eating one amongst tens of thousands of your fellow fans. But will the food even be that good outside a stadium? If you’re in LA and try this out, drop us a line and let us know if it was a home run or a strikeout.

Uber to Acquire Postmates for $2.65B

Uber has agreed to acquire Postmates in a roughly $2.65 billion all-stock transaction, according to a press release from Uber. The deal is expected to close in the first quarter of 2021.

Uber first made the offer to buy Postmates at the very end of June, after a failed attempt to snap up Grubhub. According to sources close to the matter that spoke to Bloomberg, the two companies have actually been in talks on and off for about four years. 

The boards of both Uber and Postmates have approved the transaction, which is still subject to the approval of Postmates shareholders and also any regulatory approvals. Uber said in the press release today that it will keep the consumer-facing side of the Postmates app running separately from its Eats app, “supported by a more efficient, combined merchant and delivery network.” 

Acquiring Postmates would give Uber a larger presence in certain key markets, like Los Angeles, where Postmates is the leading third-party delivery app. In the past, Uber has said it will pull out of markets where it is not the number one or number two player.

Today’s deal is another piece of evidence that third-party delivery is consolidating fast. Grubhub itself was acquired by the newly formed Just Eat Takeaway.com in June. Elsewhere, Delivery Hero recently bought South Korean service Woowa Bros. for $4 billion and Brazil-based iFood announced a merger with Colombian delivery heavyweight Domicillios.com.

Notably, DoorDash, which is still the U.S. leader in terms of marketshare for third-party delivery, has not come up in this M&A flurry. At last check, the company secured an additional $400 million in funding. It filed to go public in February and still plans on a listing for 2020.

Uber Just Made an Offer to Buy Postmates

Just weeks after it lost the chance to acquire Grubhub, Uber has made an offer to buy Postmates, according to the New York Times. 

Three sources “familiar with the matter” and speaking anonymously told the NYT that Uber could potentially buy its third-party delivery rival Postmates for $2.6 billion and that the deal was in talks right now — though it could also fall apart.

It wouldn’t be the first time a deal fell through for Uber. Only weeks ago, the company looked to be buying Grubhub to bolster its Eats business. Those plans went awry after Dutch food delivery service Just Eat Takeaway.com swooped in and made its own deal with Grubhub for $7.3 billion. 

Antitrust concerns were one of the main issues with an Uber-Grubhub deal. Had the two companies combined, the new entity would have created a delivery service with as much marketshare as DoorDash currently holds (45 percent of the U.S. market) and rendered the on-demand food delivery arena much less competitive.

A Postmates deal would raise fewer regulatory flags, since the Bay Area-based service, last valued at $2.4 billion, is a much smaller player than Grubhub.

Even so, consolidation is in full swing in the food delivery world. Besides Just Eat Takeaway.com’s deal with Grubhub, Delivery Hero recently bought South Korean service Woowa Bros. for $4 billion and Brazil-based iFood announced a merger with Colombian delivery heavyweight Domicillios.com.

Uber has said Eats will only operate in markets where it is the number one or number two player. In the U.S., that feat that would have been easy to accomplish with a Grubhub acquisition. Were a Postmates deal to go through, it’s less certain how dominant Uber Eats would be across the country, since Postmates holds considerably less market share than the other major players.

Panda Express Launches Its Own Delivery Service. Other Restaurants Could Follow

Panda Express has, in its own words, “cut out the middleman” as far as restaurant delivery is concerned. This week, the QSR chain announced it has launched its own delivery service, and also said was planning for 30,000 new hires, according to a press release sent to The Spoon.

The chain, which is owned by Panda Restaurant Group, had actually been planning to launch its own delivery service in a year’s time, according to the press announcement. The pandemic accelerated this timeline. Even with dining rooms reopening, they’re doing so at reduced capacity, and many would rather order takeout or delivery and eat in the comfort of their own home. But fees for using third-party delivery services a la Uber Eats or Grubhub can stack up quickly. For consumers dealing with job uncertainty or unemployment — two widespread things right now, thanks to he pandemic — ordering delivery with any amount of regularly just isn’t financially possible right now.

Panda Express noted the exorbitant fees in its announcement, and said with this new delivery service, guests “will not incur additional fees typically found on third party sites.”

However, a Panda Express spokesperson confirmed to The Spoon that Panda Express will still be available on third-party delivery services, “such as Uber Eats and Postmates.” So this new delivery service could be the start of a slow transition towards bringing off-premises operations back in house.

Which is definitely a post-pandemic trend to watch. Not that we’re post-pandemic yet, one of the many flaws in our food system the COVID-19 crisis put a spotlight on is the relationship between third-party delivery services and restaurants. Sky-high customer fees, even higher commission fees for businesses, shady business practices, and tipping policies for workers are all griefs the restaurant industry has voiced in the past year. To offset some of the high costs of doing delivery, restaurants have to raise their prices for customers. 

Restaurants are being urged by many in the industry to try and pull some of their off-premises strategies back in house in an effort to regain some control over their operations and, more importantly, their customer data and relationships. One analyst recently went as far as to say that “In the longer-term, many restaurants are going to see the value of investing in an in-house system for delivery orders.”

That won’t happen immediately. For many businesses, in-house delivery is actually more expensive than using a service like Uber Eats. But it could well be that the pandemic, the subsequent restaurant industry meltdown, mass unemployment, and a recession spur more restaurant into action in terms of finding ways to take more control back of their off-premises operations. If nothing else, this will definitely be a trend to watch in the latter half of 2020.

As far as the 30,000 new hires, Panda Express told Nation’s Restaurant News that new positions will exist to “execute the new health and safety operations and procedures, such as contactless service, curbside assistance, drive-thru assistance, expediters for to-go and online ordering, as well as new cleanliness protocols.”

Third-Party Delivery Suspends Services to Comply With Curfews

Minneapolis, Los Angeles, Nashville, Philly, Atlanta . . . the list of cities under curfew goes on, and if you live in one of those places and were counting on some food delivery for your supper, you’ll have to look elsewhere. DoorDash recently told The Verge it is “pausing” operations to comply with those local curfew orders. 

From The Verge:

DoorDash, which has seen an increase in orders as restaurants have been forced to suspend eat-in dining during the pandemic, told The Verge it is pausing operations to abide by curfews. Its spokesperson did not provide details about which cities were affected as of Monday.

Uber has also suspended service in some cities, which extends to its Eats food delivery business. An Uber spokesperson told Business Insider that customers should use the app to learn more about these suspensions, and that they should use Uber/Uber Eats “for emergency purposes only during this time.”

Postmates, which is the biggest service in Los Angeles, is also abiding by local curfews. Grubhub said it is “pausing operations when needed.”

Delivery companies aren’t being specific about which cities have suspended which services. Even in places where an order goes through, they are then cancelling orders. For ones that actually go through, some drivers are having trouble actually getting the food to customers:

How long these suspensions and changes to service last will, most likely depend on when the unrest subsides. To find out if food delivery is a realistic prospect in your city, best to check for updates directly in these services’ apps.

Hold the Phone. Soon it Will Be Your Restaurant’s Menu

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A couple of years ago I came across a restaurant in Dallas, Texas that featured a menu written entirely in emojis. It was unexpected and creative, yet clear enough that a server didn’t have to come over and re-explain everything on the page.

I’m not (necessarily) advocating we battle the current restaurant industry fallout with emoji menus, but maybe we could use some of that outside-the-box thinking when it comes to revising menu formats to fit the new reality we live in. 

Since reusable menus are basically germ repositories, it’s no surprise they’re out now that dining rooms are reopening. The CDC’s recently released guidelines for reopening suggest restaurants “avoid using or sharing items such as menus” and to “instead use disposable or digital menus. . .” The National Restaurant Association’s guidelines tell restaurants to “make technology your friend” and suggest mobile ordering, and every other restaurant tech company that contacts me these days is offering up some form of digital menu for restaurants to integrate into their operations. 

A lot of restaurants will definitely start out by offering simple disposable menus. Paper is cheaper than software most of the time, and typing up and printing out a menu is faster than onboarding your business to a new tech solution.

Over time, though, that could change. As more emphasis gets placed on digital ordering for everyone, we’ll access more restaurant menus through our own phones and mobile devices. That opens up a whole world of possibilities in terms of what restaurants could one day offer on their menus beyond just the food items themselves.

Just a few examples: Menus could provide in-depth information the ingredients in a dish, like where that cilantro came from and how many months the apple traveled before it hit your plate. Menus might also include ratings from other customers, and Amazon-esque “you might also like” recommendations could show up on the screen. Maybe you could dictate the portion size you want, thereby reducing food waste.

With AI making its way into restaurant tech more and and more, restaurants could also build dynamic pricing into menus, based on time of day, foot traffic, weather, and offer coupons and promotional offers in real time. And sure, if someone really wanted to, an emoji menu would probably fly right now in more than a few places.

Most of these things exist already, though they’re not widespread and some are still in conceptual stages. The massive overhaul of the restaurant menu is a chance to start bringing those disparate pieces together to revamp the way we order our food.

Kitchen United Is Open for Business in Austin

One effect of this whole pandemic is that we’ve seen an uptick in to-go orders, and that trend won’t subside anytime soon. That makes now a good time for restaurants — some of them, at least — to consider adding a ghost kitchen to their operations. 

Those in Austin, TX can add Kitchen United to their list of choices when it comes to choosing a facility. The company, which provides ghost kitchen infrastructure (space, equipment, etc.) to restaurants announced this week its new location near the University of Texas is open for business. 

A number of restaurant chains have either already moved into the space or plan to do so in the coming weeks. Kitchen United has also allocated one of the kitchens in the new space to Keep Austin Fed, a nonprofit that gathers surplus food from commercial kitchens and distributes it to charities. As part of the deal, Keep Austin Fed will be able to “rescue” food from restaurants with kitchen operations inside the new KU facility. 

A press released emailed to The Spoon notes that “additional kitchen space is currently available” for restaurants that want to expand their off-premises operations. On that note, a word of advice for restaurants: make sure your restaurant is actually in need of a ghost kitchen before signing up with one. Kitchen United’s own CEO, Jim Collins, told me recently that restaurants need a certain amount of customer demand in order for the economics of a ghost kitchen to make sense. It’s not a small demand, either. In times like these, where the future of all restaurants is uncertain and what little money there is needs to be spent carefully, it pays to exercise some caution, even when it comes to an enticing new trend like ghost kitchens. 

Los Angeles Moves to Cap Third-Party Delivery Commission Fees

Behold, more fee caps for third-party delivery companies. This week, the Los Angeles City Council voted 14–0 to ask attorneys to draft a law that caps the commission fees delivery services charge restaurants at 15 percent. “Why should restaurants, and their customers, be put in a position to subsidize delivery app companies? We need to level the playing field,” Councilman Mitch O’Farrell told the Los Angeles Times.

This week’s proposal would also require that 100 percent of the tips customers leave on delivery orders through these apps go directly to the driver, which is pretty standard nowadays but caused some ruckus in the not-so-distant past. The fee caps would end 90 days after Los Angeles lifts its dining room closures. 

Needless to say, the move — which several other cities have already made — is not popular with delivery companies. Postmates, which is LA’s most popular third-party food delivery service, said governments setting a price on fees threatens jobs and creates “a false choice between local restaurants and the delivery network companies that support them.” The service wants instead to have a fee charged in delivery orders that would assist restaurants. That in turn would translate to yet-another fee for the customer, and be yet-another way in which restaurant food delivery services will suggest/try anything to avoid having to shoulder some of the burden the pandemic has brought on the restaurant industry.

As restaurants slowly reopen and the industry starts to adjust to its new normal, now we’ll begin to see if fee caps actually make a difference for struggling restaurants, and if they are here to stay for the long run.

Delivery ‘Bots from Starship and Postmates Spotted in the Wild on Both Coasts

We’ve been covering the acceleration of robots being rolled out for contactless food deliveries in different cities across the country. As these li’l rover ‘bots become more public, the public is catching their first glimpse of, and shooting video of, our food delivery future.

Starship recently started making restaurant and grocery deliveries in Chevy Chase, VA. That’s where Jake Tapper, host of CNN’s State of the Union caught not one but two Starship robots scurrying about in the rain and posted a video of them to Twitter.

Tapper wrote “I assume for food delivery? Still a bit @blackmirror,” which struck us as a bit odd. Black Mirror is the sci-fi anthology TV series that shows the dark side of our reliance/addiction to technology. But Tapper seems to be ignoring the fact that we are already living in the darkest timeline where human-to-human contact is fraught with anxiety and potentially danger, and technology like autonomous robots can actually be useful and could save lives.

As a reminder for Mr. Tapper, robots don’t get sick, won’t inadvertently cough on your broccoli and can help get food to people who may not be able to otherwise leave home. Not everything about robots is perfect, obviously. Robot companies like Starship are charging restaurants big commissions that might be unsustainable, and there are always are big, societal questions about automation and the cost of human jobs. But right now, we should absolutely be experimenting with more self-driving deliveries.

Over the West Coast, friend of The Spoon, Mike R., saw the Postmates Serve robot cruising down a Los Angeles city street. With its lit up eyes and bright color, the cheery robot certainly seemed to fit in with sunny California vibe. An “On Delivery” message displayed on its screen to let passers by know it was on a job as it quietly rolled on its own down the sidewalk (followed, appropriately enough, by someone on a scooter wearing a facemask).

Postmates Serve Robot Out on Delivery

For those living in the middle of the country, fret not. Self-driving delivery robots won’t be relegated to the coasts. Up in Ann Arbor, MI, Refraction’s REV-1 is making lunch and grocery deliveries. And Starship is eyeing Frisco, TX among the next cities to get its robot delivery service.

If you see robots running around your town, please shoot a picture or a video and share it with us!

Boston, D.C., and Baltimore Join the List of Cities That Want Caps on Third-party Delivery Fees

Baltimore, Boston, and Washington, D.C. all recently joined the growing list of cities imposing mandatory caps on the commission fees third-party delivery services charge restaurants. San Francisco, Chicago, NYC, and Los Angeles have already passed similar measures or are considering them.

The D.C. Council passed emergency COVID-19 legislation on Tuesday that, among other things, capped commission fees at 15 percent during the city’s state of emergency. As the Washington Post noted, “The commission cap, similar to ones implemented in Seattle and San Francisco, is meant to help eateries turn profits on those sales.”

Last week, city council members in Boston proposed an order for a hearing to discuss the possibility of caps on commission fees — much like the one NYC just held last week. A date has not yet been set for the Boston hearing. 

Baltimore is legally prohibited from imposing caps on delivery companies, but that didn’t stop Mayor Jack Young from sending a formal letter to DoorDash, Postmates, Grubhub, and Uber Eats, asking them to cap commission fees at 15 percent.

It’s a noble gesture, but Mayor Young might as well be talking to a concrete wall. The major delivery services have made it clear that they strongly oppose any caps on commission fees, arguing that caps would make food delivery orders more expensive for consumers, lessen the number of orders coming through the platforms, and ultimately harm both restaurants and the delivery companies themselves. As a Grubhub representative put it at last week’s NYC hearing, “These caps may force us to exit certain markets or suffer substantial losses that threaten the sustainability of our businesses.” 

To which one council member replied, “You’re saying a lot of stuff would force you to operate at a loss but you don’t seem to care that you’re forcing restaurants to operate at a loss.”

Grubhub, in particular, has taken severe (though deserved) heat for the way it has handled it has restaurant relationships during the COVID-19 crisis. The service sent out a press release back in March that led many to believe it was waiving commission fees for restaurants during the health crisis. In actual fact, Grubhub was only deferring those fees, and the policy included a lot of unsavory fine print that won the company yet-more bad press. And if you haven’t yet seen the viral Facebook photo that shows just how little restaurants collect from third-party delivery orders, check it here to understand why restaurants are nowhere near turning a profit under the current commission fee policies.

Other services are at least appearing to be more helpful. Postmates temporarily waived commission fees for independent restaurants, though the move only applied to new businesses signing with the platform and based in San Francisco. DoorDash has waived commission fees for all its independent restaurants through the end of May.

But what happens at the end of May? And what happens if a second wave of the novel coronavirus imposes another set of shelter-in-place mandates?

The entire restaurant industry is forever changed because of this pandemic and the dining room shutdowns it has caused. Menus are shrinking, restaurants will re-open with less seating, major chains are overhauling their entire store formats, and small businesses are going to have to adapt to technologies and procedures they might never have considered before. Delivery companies could do themselves and everyone else a huge favor by implementing their own fee caps and accepting that they’re part of the restaurant industry and need to share in some of the pain. Otherwise they can expect more government fee caps and regulations, and I wouldn’t be surprised if the whole industry forcefully turns on them at some point down the line.

Grubhub, DoorDash, and Other Delivery Services Are Getting Sued Over Restaurant Prices

A class action lawsuit filed Monday alleges that third-party delivery companies DoorDash, Grubhub, Postmates, and Uber Eats are using their market power to push menu prices higher during the coronavirus pandemic, according to Reuters. 

The three consumers who initiated the suit allege that third-party delivery companies dictate in their contracts the prices restaurants can charge for orders — even those placed directly with the business and not via delivery apps. These terms along with sky-high commission fees that can reach 30 percent or higher for each transaction, are in turn forcing restaurants to raise menu prices across the board. Paying customers ultimately shoulder that cost, whether they’re getting food delivered or eating in the restaurant dining room.

Of course, no one is eating in the restaurant dining room at the moment, but that’s another motivating factor behind the lawsuit, which has been filed against the backdrop of a global health crisis that’s shut down dining rooms and sent the entire restaurant industry spiraling.

With off-premises orders one of the few lifeline’s restaurants have right now, more businesses are forced to work with these third-party delivery services in an attempt to keep from going under. Customers ordering directly from the restaurants is better for business, but when third-party companies are dictating the menu prices, the cost hike ultimately falls on the consumer.

As the lawsuit, notes, third-party delivery apps offer “a devil’s choice” to restaurants: “In exchange for permission to participate in defendants’ meal delivery monopolies, restaurants must charge supra-competitive prices to consumers who do not buy their meals through the delivery apps, ultimately driving those consumers to defendants’ platforms,” it said. 

The lawsuit is just the latest addition to an ever-growing list of griefs advocates, lawmakers, customers, and the restaurants themselves have with third-party delivery companies. Many of those griefs, such as the high price of commission fees, are even more pronounced now that dining rooms are shuttered and some restaurants are having to close their doors permanently.

Meanwhile, reading any announcements about “relief” companies like DoorDash or Uber Eats are providing restaurants during the pandemic has become an exercise in reading between the lines to decipher the fine print. Case in point: Grubhub said in March it would provide relief by deferring commission fees for restaurants. Those fees have to be paid back within four weeks of the relief period ending, and simultaneously lock restaurants into a full year of being on Grubhub’s platform.

Last week, San Francisco introduced an emergency measure to cap commission fees from third-party delivery services at 15 percent. Some services, notably DoorDash and Postmates, are cutting down or waiving those fees for a set period of time. However, those measures are band-aids to a problem that existed long before the pandemic hit and will persist long after it subsides.

Unless enough customers get fed up with third-party delivery tactics. This week’s lawsuit suggests that is already happening. As of last week, 17 million people have filed for unemployment in the U.S., and analysts expect that number to keep rising. Many consumers are finding themselves in a position where it will be hard to pay the bills, let alone a hiked up menu price on a bowl of pasta from their local restaurant. And if a restaurant doesn’t have the power to change the price on that pasta, everyone loses out, and the power of these delivery companies has, in the words of this week’s suit, “come at a great cost to American society.”

San Francisco Places Emergency Caps on Third-Party Delivery Commission Fees

San Francisco Mayor London Breed issued an emergency order at the end of last week to put temporary caps the delivery fees that third-party services charge restaurants. The order is effective now and dictates that delivery services must cap these commission fees at 15 percent if they want to continue doing business in San Francisco as the city shelters in place.

The point of the order is to help restaurants as they struggle to stay alive during state-mandated dining room closures. Many have turned to delivery and take-out models to try and make up at least some of their lost sales, which for most businesses means partnering with third-party services like Grubhub and Uber Eats. However, those services charge as much as 30 percent per transaction in commission fees.

“We’ve listened to our restaurants and the struggles they’re facing during this unprecedented time,” Supervisor Ahsha Safaí said in the official announcement about the order. “The high commission fees being charged to our businesses remains unchanged and that cannot continue as every dollar can mean staying open or laying- off more staff.”

Of the major third-party delivery companies, some have already made moves to address high commission fees. Postmates is temporarily waiving those fees for new merchant partners operating small businesses in San Francisco. And last week, DoorDash, which owns Caviar, said it would cut commission fees by 50 percent for restaurants with five or fewer locations in the U.S., Canada, and Australia. 

In a move that should surprise no one at this point, Grubhub is opposing the order — and urging its customers to do the same. As Eater SF noted, the Chicago-based service claims caps on commission fees will increase customer fees by $5–$10 and “immediately cripple delivery orders, outweighing any potential benefits when takeout is the only option restaurants have to stay open.”

The trouble with that logic is that it seems to assume delivery and takeout will actually save restaurants during this time, which is far from certain. Transactions for full-service restaurants — many of which have quickly had to pivot to an off-premises model — have dropped 79 percent, according to NPD Group. Even after the switch to off-premises, restaurants are struggling to ensure smooth, safe operations. Others are simply shutting down temporarily, citing health concerns for their workers. Still others are closing their doors permanently, already unable to weather the storm. 

San Francisco’s emergency order to cap commission fees seems aimed at trying to ensure more restaurants won’t have to permanently go under during shelter-in-place orders. And actually, while SF may be the first city to actually pass such an order, it’s not the first to consider it. In August of 2019, the New York State Liquor Authority (NYSLA) proposed adding a 10 percent cap on the commissions that full-service restaurants pay delivery services.

At the time, I wrote that a measure like that passing could have a ripple effect on other cities around the U.S. The same is true of San Francisco’s emergency order. As more time passes and more data surfaces about how dire circumstances are for most restaurants, other major cities — Seattle, Los Angeles, NYC — could be motivated to put similar measures in place. They won’t necessarily turn delivery into a thriving business for all, but they might lessen some of the damage these commission fees are wrecking on an already damaged industry.

Walgreens and Postmates Expanding Delivery to 7,000 Stores

In response to a nation increasingly sheltering in place and socially distant, Walgreens announced this week that it is expanding its delivery program with Postmates to 7,000 stores nationwide.

To access delivery from Walgreens, customers just need to download the Postmates app. From there, they can shop for health and wellness items, including over-the-counter medications, and have them delivered via no-contact to their homes.

Today’s news is the latest in a string of announcements illustrating how traditional food delivery companies are broadening their services to meet the demands of both businesses and consumers.

Yesterday, Uber Eats announced a number of delivery partnerships with convenience stores in France, Spain and Brazil. Also yesterday, DoorDash announced a new Convenience category to deliver food and more from conveniences stores like 7-Eleven, Wawa and Circle K.

These expansions should ideally be a win/win/win scenario. Third party delivery companies can expand their market share into new verticals, a necessity given how many restaurants, their primary business right now, are shutting down. Businesses can help make up lost revenue from depressed in-store traffic resulting from social distancing by offering delivery. And consumers that still need items can get them while remaining socially distant.

The Walgreens expansion also reinforces how important delivery people are in this time of outbreak. They are risking their own health to bring us food and other essentials. Postmates currently classifies its workers as contractors, which makes them ineligible for things like health insurance and sick leave.

That may be changing though. Earlier this week, my colleague Jenn Marston reported that a New York federal judge ruled that “Postmates couriers are employees and therefore eligible for unemployment benefits during the COVID-19 pandemic.”

The one constant in this coronvirus world is change. We are watching in real-time as the food world is upended. Now we just have to see how many of these changes, like nationwide delivery from drug stores, will last once the pandemic subsides.