Decision by Albany County to cap delivery fees receives mixed reception

Albany County Executive Dan McCoy and Public Health Commissioner Dr. Elizabeth Whalen. Provided 

Albany County Executive Dan McCoy and Public Health Commissioner Dr. Elizabeth Whalen. Provided 

CAPITAL REGION — Call it the death of a thousand fees.

Amid mounting backlash, Albany County has capped food delivery apps for charging more than 15 percent for delivery fees. 

Albany County Executive Dan McCoy hopes the emergency order he signed on Monday will cut down on often-exorbitant fees, “ensuring our local businesses and residents aren’t being nickel-and-dimed while delivery workers are left holding the bag with a mediocre tip.”

Fees on apps like Grubhub, DoorDash and Uber Eats can reach as high as 33 percent, prompting growing frustration amid the industry – particularly at a time when restaurants are more reliant on the services as ever amid the ongoing coronavirus pandemic.

McCoy also said the move was a life-preserver to aid the battered food and beverage industry, especially if indoor capacity gets slashed to 25 percent as the virus surges. 

The order, which takes effect Friday, was met with mixed reception from the restaurant industry.

“Any little bit of cash will definitely help us to maintain our operations,” said Eric Li, president of Kuma Ani, a Japanese-style restaurant with four Capital Region locations.

Abby Rochmaker, owner of the Dilly Bean on the Jay Street Marketplace in downtown Schenectady, said a similar order in Schenectady County may be helpful, but wondered if capping delivery fees would actually result in savings.

Grubhub’s delivery fee is 10 percent, she said, but constitutes just one component of added costs.

Others include marketing services and processing fees – and that doesn’t include tips for drivers.

“In theory it sounds great,” Rochmaker said. “But the problem isn’t only delivery or commissions – it’s the commissions on top of that, also.”

While some of those fees can be whittled down if restaurants opt to bypass being listed on smartphone apps and instead include a link to food-delivery services directly on their websites, Rochmaker said that’s not how most people use the service, opting instead to scroll directly through offers on their smartphones.

And as a growing business that recently started offering hot food, Dilly Bean is reliant on platforms like DoorDash and GrubHub to connect with a demographic that would otherwise be out of reach.

Others said third-party delivery apps are crucial for staying afloat in an uncertain and competitive climate.

“You have to participate in order to have business,” said Li, who wondered if delivery apps would simply raise other fees to accommodate for the cap.

DoorDash acknowledged the possibility.

While the San Francisco-based company said they have “always supported” restaurants, “pricing regulations could cause us to increase costs for customers, which could lead to fewer orders for local restaurants and fewer earning opportunities for Dashers,” said a company spokeswoman.

“Pricing regulations can also remove options available to restaurants by limiting their ability to opt-in to additional services to help their business,” said the spokeswoman. “We remain focused on solutions that better support restaurants, customers and Dashers.”

GrubHub declined comment.

McCoy said he will renew the order regularly until the Albany County Legislature adopts similar legislation into law.

Chelsea Heilmann, owner of Square One Cafe in downtown Schenectady, said Grubhub can generate up to $300 in daily sales.

To accommodate the fees, she had to raise prices for orders received through the app.

But she’s unsure if the general public is aware of how just much extra costs are being factored into their orders – especially when they choose to pick them up themselves.

“Hopefully this will give people more knowledge and they’ll start calling their food in more,” Heilmann said.

Heilmann said some downtown business owners have informally discussed starting their own delivery network, but said universal buy-in would be required to make it work, while other elements – including liability insurance – are unknowns.

While third-party food delivery apps are a needed crutch in a battered landscape, some have eschewed them entirely.

“I don’t want to get more business and less revenue,” said Marc Renson, owner of Ambition Cafe. “I’d be working physically harder to pay DoorDash.”

Renson instead charges a $5 flat fee for employees to deliver orders themselves, a measure that helps retains jobs.

Tara Kitchen owner Aneesa Waheed said the fees aren’t only a problem, but orders often result in poor service and unreliable drivers, including those who show up just moments after orders are placed, disrupting the kitchen flow.

All of those factors converged on Mother’s Day into a perfect storm which resulted in her quitting the platforms.

“Life’s gotten a million times better for me since I fired them,” Waheed said.

Tara Kitchen, which opened a new location in Guilderland last month, has instead updated their website with software which allows customers to order online.

Ditching the apps has been a win-win, Waheed said, because customers are spared excessive fees, while at the same time, Tara Kitchen uses the data to refine and tweak offerings, all of which helps claw back a degree of control from outside companies.

Despite the move, Tara Kitchen hasn’t seen a drop-off in business.

“We haven’t missed a beat,” Waheed said.

Breaking the grip, Waheed said, is possible for others: They just have to network, hustle and continue to be creative in how they build their brand and build up a loyal customer base.

“You have to find another way that works for you, and a way that you can control,” Waheed said. “Don’t let the fear control you.”

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