By Kyle Lam
The City of Milpitas has capped the delivery fee that food delivery services such as UberEats, GrubHub, Postmates, and Doordash can charge in order to follow the precedent set by the cities of San Francisco, Santa Cruz, which did the same in April 2020, along with nine other Bay Area cities, according to the Milpitas agenda report for Oct. 20.
The decision came after a unanimous vote by the Milpitas City Council on Oct. 20 to cap food delivery fees at 15% to help local restaurants during the COVID-19 pandemic; these businesses make less profit because of the fees charged to them by delivery services. In the same vote, it was determined that the payment processing fee from credit card purchases would be capped at 3%.
“With the prohibition of indoor dining for the past seventh months, until last week, and with approximately one-third of restaurants participating in the outdoor dining program, third-party food delivery services have become a significant source of generating income,” according to the City of Milpitas Agenda Report from Oct. 20, 2020.
Delivery companies charge fees related to delivering food, listing and marketing the restaurant on their platform, processing orders, and helping with the general maintenance of the platform, according to the Milpitas agenda report. These fees have a large impact on the profit margins of small restaurants who are often charged fees between 20% and 30% per order, as stated in the report.
The analysis portion of the report concluded that “the proposed temporary third-party food delivery service fee caps can protect restaurants during a time of heavy reliance and the pandemic.”
The report states that it will be up to the restaurants, and not the city, to file a complaint with the delivery service if the delivery service chooses to violate the new 15% cap set by the new vote.
In an online Zoom interview, Jazmine Finuliar, a junior at Milpitas High School, said that although she has been using delivery services like UberEats and Doordash more often than she did before the pandemic, she was not aware of the new policy.
“I definitely do think things such as regulating social distancing and compromising when it comes to particular services are enough to stabilize business in the city,” Finuliar said when asked what about how she thought the city was doing for local small businesses.
To reduce the number of COVID-19 cases, Milpitas, as well as federal and state governments, issued multiple health orders in order to encourage social distancing, the agenda report stated. The report further states that Milpitas City Manager, Steve McHarris, declared a State of Local Emergency in Milpitas which temporarily prohibited “non-essential” businesses from operating and that the city has undergone various projects in order to assist local businesses, including the Milpitas Microenterprise Grant Program, the Virtual Business Assistance Center, and the Milpitas Small Business Spotlight Program.