Modesto To Impose 15% Cap On Food Delivery Charges

The Modesto City Council has enacted a measure that imposes a 15% cap on the amount food delivery services can charge customers and or restaurants during the pandemic. Because it's an urgency ordinance the cap goes into effect immediately.

Food delivery services such as GrubHub or DoorDash have been able to charge from 30 to 35% of the cost of the order.

The pandemic has caused most restaurants to rely on delivery or pickup for most of its business in places like Modesto. Modesto City staff surveyed 24 local restaurants with 22 in favor of a delivery cap.

Councilman Chris Ricci voted in favor of the ordinance.

“Businesses are paying up to $2,000 a week in fees to these apps and when you are talking about $4,000 a month in this pandemic, that’s the difference between paying your rent and not paying your rent,” said Ricci.

Delivery driver Jim Pyatt spoke to the council about the other side of the issue.

“Drivers are going to be like why would I do this? On one hand, I see what you are saying but it’s going to also affect the other part of the community that is trying to get this food to the people that want it,” said Pyatt.  

Chad Horrell with DoorDash pleaded with the council to at least make the cap at 20%.

“Dashers on average $22 an active hour on our platform,” Horrell said. “Doing the math on an average $20 order with 15% cap is $3. That’s a long way towards covering the cost of the delivery.”

Council Tony Madrigal says the council needed to step in and cited cities such as San Jose, Oakland and Livermore which have done the same. 

“There’s a lot of businesses that are hurting out there,” said Madrigal. “Every little bit that we can do as a city will help our local businesses who have razor-thin margins, especially in the restaurant industry.” 

The council voted 6-1 in favor of the urgency ordinance with a 15% cap.