SF mayor caps commissions for food delivery startups to 15% during the pandemic; startups say the cap will raise customer fees, hurt delivery people's income
As struggling San Francisco restaurants pin their hopes of staying open on delivery and takeout orders, city officials have stepped …
San Francisco ChronicleJustin Phillips
Context & Ripple Effects
With San Francisco restaurants dependent on delivery to survive lockdowns, Mayor London Breed has imposed an emergency 15% commission cap on DoorDash, Grubhub, and Uber Eats — well below the roughly 30% the platforms typically charge. The startups' immediate counterargument is that the shortfall will not come out of their margins but will be passed through as higher customer fees and lower courier earnings.
The move kicked off a regulatory template other cities copied: within a year, New York had passed its own package of platform restrictions and both cities were moving to make temporary caps permanent, prompting DoorDash, Grubhub, and Uber Eats to sue New York over what they call government overreach.
First-order effects
DoorDash, Grubhub, and Uber Eats lose most of their per-order revenue in San Francisco overnight, while capped-out restaurants keep the difference on every delivery order during the crisis.
The platforms say they will offset the cap by raising customer fees and cutting what delivery workers earn per order — shifting the cost onto the two sides of the marketplace with no political voice at the hearing.
Second-order effects
Uber responded by pulling delivery service from low-income San Francisco neighborhoods, which a city supervisor called retaliation — showing platforms can geographically ration service where caps bite hardest.
New York City treated San Francisco's emergency cap as proof of concept, passing five bills against the platforms and approving a 23% cap below the usual 30%, turning one city's crisis measure into a national playbook.
Third-order effects
If caps become permanent, the lawsuit by DoorDash, Grubhub, and Uber Eats against New York signals that litigation, not exit, becomes the platforms' standard defense — and courts become the arbiter of how much of the restaurant-delivery value chain apps may capture.
The deeper structural shift is that delivery-app take rates are being reclassified from private pricing decisions into regulated utilities-style rates, set city by city rather than by marketplace competition.
The trend: Food delivery platform economics are moving from self-set commission rates to municipally regulated take rates, with San Francisco's pandemic-era cap as the precedent other cities are hardening into law.
Restaurants are struggling to survive and delivery is their main option for staying open. I'm instituting a cap on the fees that delivery services can charge restaurants during this emergency, because it can make the difference between them staying afloat or laying-off staff.
San Francisco decides that it would rather have no delivery service than pay what it costs to boost supply in difficult times. 🤦🏽 https://www.sfchronicle.com/ ...
Surreal. Mayor of San Francisco is reducing food deliveries by decree with price caps. Politicians will create food shortages even where covid19 couldn't. Such simple self-destructive behavior. https://twitter.com/...
this is the worst possible thing you could do to encourage more delivery! complete stupidity. and you were doing so well Mayor Breed 🤦♀️ https://twitter.com/...
@kimmaicutler Deliveries companies run a three lever business to keep 1. restaurants open & on the platform, 2. drivers driving, and 3. consumers ordering. I've seen what happens when you yank one lever without care and it's bad for all parties.
In my area, Uber Eats has been offering free delivery *specifically for local businesses* + discounts on large orders to keep demand up and keep cooks working. I find it absolutely flabbergasting that @LondonBreed thinks she knows how to run that business better than the CEO. htt…
SF Mayor announces she's adjusting the pricing structure of food delivery two-sided platforms, lowering fees charged to restaurants and raising fees charged to consumers. The net effect of this policy will be, uh, *checks notes* ... nothing https://twitter.com/...
The free market can handle this, there are 20+ companies battling it out for delivery — & restaurants can always do their own Be careful @LondonBreed, the city interfering with the invisible hand can have unintended consequences—like the delivery services leaving SF & lawsuits ht…
@kimmaicutler Passing the buck to consumers will depress demand, which mean restaurants fire more ppl and drivers get less work. These are very finely tuned businesses that even those companies took years to work out how to manage sustainabily for all parties.
It's sad how self defeating San Francisco is. We want cheaper housing so we're going to not build housing. We want more restaurant delivery so we're going to make it cost prohibitive for delivery companies. https://twitter.com/...
Cool. So how are we going to make sure the delivery services can continue to pay people to put their health at risk so others can eat. https://twitter.com/...
I know, the obvious reaction is that this is terrible. But taking the opposite view (in support of Breed) for a sec: SF has relatively low price elasticity. Delivery services can simply transfer the fees over to the end-user. Most will pay. Restaurants need the money. https://twi…
This is overreach. The market can deal with this. Is there evidence of some sort of severe price gouging? Delivery companies also “deserve” to keep their doors open and make a profit. https://twitter.com/...
Why not pass the cost to the consumer instead of hurting the restaurant? Not sure I agree that restaurants can stand up delivery infrastructure. Also not entirely sure that free market rules apply here - see Uber surge pricing in the wake of NZ shooting. We are in a crisis. https…
I love that London is trying to help & taking quick action. But this is going to hurt local restaurants way more than it helps. No one believes delivery companies are massive profit machines, the incentives are aligned here to drive the volume that keeps jobs w/out intervention. …
Food delivery workers are some of the most important people in the City right now. We need to be doing everything we can to support them and the restaurants that employ them. NYC needs to institute a cap on fees from delivery services NOW. https://twitter.com/...
My initial reaction is that this is a bad idea. Delivery platforms are already losing money and capping their fees could force them to cut back deliveries. But on second thought, this is a two-sided market. https://twitter.com/...
Of course, customers might respond by ordering less takeout. In which case restaurants might have to cut their prices and everyone would be roughly back where they started.
very interesting timing from DoorDash, which sent out an email yesterday saying they're choosing to lower fees on SF restaurant commissions.... https://twitter.com/...
San Francisco is the hometown of Uber, Postmates and DoorDash. But the city is now capping those companies' delivery fees on restaurant meals after an outcry by local chefs, @JustMrPhillips reports: https://www.sfchronicle.com/ ...