Right now restaurants are in a damned if you do damned if you don't situation with the various delivery services out there.
If the restaurants explicitly agree to do business with grubhub and the like, they have to give the delivery service a 10% cut. The delivery service also takes a percentage cut on the customer side. I think there's the expectation that the restaurants keep charging the delivery service the same amount for food being delivered as they charge anyone who orders food from the restaurant and picks it up. This forces restaurants to raise the price for all their customers to pay for that 10% cut.
Have you noticed that the prices for food via delivery are higher than the price for food you pickup? That's not due to the restaurant charging the delivery service a discriminatory price, that's actually the third way that the food delivery service takes a cut.
Now, as a restaurant owner, you look at all these facts and decide that the delivery companies are fleecing you. You decide you'll use the waiters and waitresses you already had on staff to deliver the food to your customers, and you'll charge them something like $5 for delivery. Not really that unreasonable, given the circumstances, right?
Well, what happens in those cases is that the delivery companies will list the restaurant anyways. And they'll offer free delivery. And they'll charge less for your food online than you charge them. They take the financial hit so later they can come to the restaurant owner with the data to show that they really need the delivery service after all. They'll undercut your business to get a greater market share. They've got lots of VC money to burn, that you, as a restaurant owner, can't compete with.
Through all of this, customers will leave negative reviews on Yelp, for the restaurant, when the wrong food is delivered, or their food is cold, or their order was delivered to the wrong place. The reputation of the restaurant takes a hit due to the third party's shoddy delivery people.
Thanks for giving so much more color. I'm only focusing on one specific argument, though. I am not ignoring what you are presenting but challenging an invalid claim on profit extraction.
A courier service is extracting profits no more than a waiter or waitress is. Whether it's staff (waiter) or contractor (courier), both are providing "delivery" services in exchange for fees. A waiter offers internal delivery within the restaurant. A courier offers external delivery to the home. Counting the courier's myriad cuts and how it monetizes its services isn't revealing profit extraction. You're revealing how couriers are paid for their services (10% of the bill + market premium).
So in the second scenario, you get to keep on selling food for full price and the delivery companies generate business for you for free, but it's a bad deal because .. a few people might leave bad reviews on yelp when something is clearly DoorDash's fault? It sounds like a good deal to me. You get bad reviews from idiots no matter what anyway.
> a few people might leave bad reviews on yelp when something is clearly DoorDash's fault?
If you don’t have a good set up for delivery, the bad reviews will not be “a few” and it will certainly be more than what you would’ve otherwise had. There are examples of restaurants receiving literally dozens of negative reviews from this in a short period of time.
In the second scenario you will not be able to pay the waiters you had on staff before the pandemic. There's nothing for them to do (assuming the restaurant moves to carryout only, as is currently mandated in DC.) You get paid for the food from the delivery service, but you don't see any tips.
If the restaurants explicitly agree to do business with grubhub and the like, they have to give the delivery service a 10% cut. The delivery service also takes a percentage cut on the customer side. I think there's the expectation that the restaurants keep charging the delivery service the same amount for food being delivered as they charge anyone who orders food from the restaurant and picks it up. This forces restaurants to raise the price for all their customers to pay for that 10% cut.
Have you noticed that the prices for food via delivery are higher than the price for food you pickup? That's not due to the restaurant charging the delivery service a discriminatory price, that's actually the third way that the food delivery service takes a cut.
Now, as a restaurant owner, you look at all these facts and decide that the delivery companies are fleecing you. You decide you'll use the waiters and waitresses you already had on staff to deliver the food to your customers, and you'll charge them something like $5 for delivery. Not really that unreasonable, given the circumstances, right?
Well, what happens in those cases is that the delivery companies will list the restaurant anyways. And they'll offer free delivery. And they'll charge less for your food online than you charge them. They take the financial hit so later they can come to the restaurant owner with the data to show that they really need the delivery service after all. They'll undercut your business to get a greater market share. They've got lots of VC money to burn, that you, as a restaurant owner, can't compete with.
Through all of this, customers will leave negative reviews on Yelp, for the restaurant, when the wrong food is delivered, or their food is cold, or their order was delivered to the wrong place. The reputation of the restaurant takes a hit due to the third party's shoddy delivery people.
That's what this law is attempting to address.