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Economy & Business

Fee Caps, Tip Transparency For Food Delivery Apps Win Approval From St. Louis Board

An employee brings food to customers outside Indo on Tower Grove Avenue on March 20, 2020.
Carolina Hidalgo | St. Louis Public Radio
An employee brings food to customers outside Indo on Tower Grove Avenue in March.

Popular delivery apps such as UberEats, GrubHub and DoorDash might soon be more transparent about restaurant fees and driver pay for orders in St. Louis.

The St. Louis Board of Aldermen approved a measure Friday that would require the apps to disclose how much gratuity money their delivery drivers make from online orders and what proportion of those tips cover drivers’ base wages. 

The ordinance also prevents third-party delivery apps from charging restaurants fees worth more than 20% of the total order value. 

The measure passed uncontested and without discussion from the board after a vote to fast-track it earlier this week. It now heads to Mayor Lyda Krewson’s desk for final approval or a veto. If signed, it would take effect immediately, then expire 60 days after the city lifts its temporary restrictions on dine-in restaurants. Krewson has not indicated whether she supports the measure.

Alderwoman Christine Ingrassia proposed the measure after she saw how St. Louisans were relying more on delivery services to obtain food during the coronavirus pandemic. 

The bill addresses apps that “a lot of us are used to using, typically when we’re feeling lazy,” Ingrassia said in a committee meeting last month. “Due to COVID-19, they have become increasingly popular.” 

But the apps’ business models can lead to surprise costs for delivery drivers and restaurants, Ingrassia said. She wants the bill to help limit that problem and inform consumers. 

DoorDash representatives said in a statement that price controls and commission caps are not a good solution to these problems. 

“It hurts restaurants by making delivery more expensive and thereby reducing demand,” the statement said. DoorDash representatives said they hope to continue discussing the issue with St. Louis officials. 

GrubHub representatives echoed DoorDash’s concerns. “This cap will limit how restaurants, and especially small and independent establishments, can effectively market themselves to drive demand and therefore severely limits how many customers and orders we can bring to these restaurants,” a spokesperson wrote in a statement.

Restaurant owner Christian Ethridge said in a June committee meeting that the bill could help small-business owners by decreasing costs that prevent them from turning a profit. 

“A lot of the cost incurred by running an app such as Uber has been passed on to the small business,” he said. “It is very evident how harmful it is.” 

Ethridge said that his restaurant, Taco Circus, doesn’t receive customer information and has to pay additional fees to participate in the platform. Ethridge said slow delivery service spurred negative reviews for the restaurant — but restaurants have no control over whether or how the food is delivered once a third-party app takes the order. 

“When our restaurants lose money, that means our economy loses money. When the money goes to a national company, then it leaves our local economy,” he said. Ethridge said the bill is a “win-win” for local restaurants.

Krewson has several weeks to decide whether to approve or veto the bill. 

Follow Kae on Twitter: @kmaepetrin

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