Province pushing to make restaurant food delivery fee cap permanent

The use of food delivery apps has increased during the pandemic. But for restaurants, the apps also presented a problem: Fees of up to 30% cut deeply into restaurants’ already thin profit margins.

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Ravi Kahlon, Minister for Jobs, Economic Recovery and Innovation (second from right) announced the Virtuous Pie cap on Thursday. Photo: Government of British Columbia via Flickr

At the Virtuous Pie on Pandora Avenue on Thursday, Ravi Kahlon, Minister of Jobs, Economic Recovery and Innovation, announced that the province is introducing legislation that would ensure that a temporary cap on delivery charges for food becomes permanent.

The legislation will allow the provincial government to continue to cap delivery companies’ fees and what they charge restaurants for their services. Charges will be capped at 20% of the value of an order.

This cap is crucial for businesses still recovering from the pandemic and whose businesses are increasingly serving their customers through delivery, said Ian Tostenson, president and CEO of the BC Restaurant and Foodservices Association. .

Before the pandemic, delivery made up only about 15% of the restaurant industry; once the pandemic hit, that percentage jumped to more than 80%, according to Tostenson. Now, he said, delivery accounts for about 25 to 30 percent of restaurant business.

The temporary cap was first introduced in December 2020 as part of the Emergency Program Act. This was in response to delivery services charging restaurants up to 30% of the cost of an order. The cap was set to expire on December 31.

“Before the fee cap was in place, it was always a bit uncertain how long we could continue to provide the service,” said Kelsey McInnes, managing director of Virtuous Pie, adding that the fee cap helped to continue to ensure delivery. She says delivery remains 40-45% of the restaurant’s business.

The legislation would also include protections for delivery drivers to ensure their pay does not decrease due to the cap.

However, even low-cost food delivery apps have taken big bites out of restaurants in British Columbia: This summer, restaurants in Victoria went public with accusations that local app Tutti owed hundreds of thousands of dollars she had collected on behalf of the restaurants.

Since March 2020, restaurants and bars have had to readapt and, at times, close due to evolving public health restrictions related to COVID-19. This has taken its toll on businesses – many have had to lay off staff, and now many are struggling to recruit and retain workers. Capital Daily wrote about the industry-wide labor shortage earlier this year.

—With files from Ryan Hook

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