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RECOMMENDATION
April 16, 2024
1. Ordinance
AGENDA REPORT
Honorable Mayor & City CouncilLaurence S. Wiener, City Attorney AN ORDINANCE OF THE CITY OF BEVERLY HILLS AMENDINGARTICLE 8 OF CHAPTER 4 OF TITLE 4 OF THE BEVERLY HILLS
MUNICIPAL CODE TO REGULATE THIRD-PARTY FOOD DELIVERY
SERVICE CHARGES AND DISCLOSURES
It is recommended that the City Council move to waive the full reading and adopt the ordinance entitled: “AN ORDINANCE OF THE CITY OF BEVERLY HILLS AMENDING ARTICLE 8 OF CHAPTER 4 OF TITLE 4 OF THE BEVERLY HILLS MUNICIPAL CODE
TO REGULATE THIRD-PARTY FOOD DELIVERY SERVICE CHARGES AND DISCLOSURES.”
INTRODUCTION
At its meeting of March 18, 2024, the City Council conducted a first reading of this ordinance and introduced it.
This ordinance amends the Beverly Hills Municipal Code related to third party food delivery service. The updated regulations include, but are not limited to:
1) Preserving the 15% rate for core delivery services, but allowing restaurants to voluntarily opt-in to pay rates to the third-party food delivery service companies for additional offerings beyond core services such as marketing, advertising, searchengine optimization, or business consulting without the City limiting the costs for those additional services.
DISCUSSION
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Meeting Date: April 16, 2024
2) Prohibiting a third-party food delivery service from intentionally inflating or altering a restaurant’s purchase price without the consent of the restaurant’s owner or their designee.
3) Establishing a termination provision that allows restaurants to terminate their contract with a third-party delivery service upon 72 hours’ notice. 4) Ensuring that tips are paid to the person delivering the food.
FISCAL IMPACT
There are no material fiscal impacts.
Laurence. S. Wiener
City Attorney
Approved By
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Attachment
I
ORDINANCE NO. 24-0-
AN ORDINANCE OF THE CITY OF BEVERLY HILLSAMENDING ARTICLE 8 OF CHAPTER 4 OF TITLE 4 OF
THE BEVERLY HILLS MUNICIPAL CODE TO REGULATE
THIRD-PARTY FOOD DELIVERY SERVICE CHARGES
AND DISCLOSURES
THE CITY COUNCIL OF THE CITY OF BEVERLY HILLS HEREBY ORDAINS AS FOLLOWS:
Section 1. Article 8 (“Third-Party Food Delivery Services”) of Chapter 4 (Other Regulations for Specific Types of Businesses and Activities) of Title 4 (Regulation of CertainTypes of Businesses and Activities) of the Beverly Hills Municipal Code is hereby amended toread as follows:
“Article 8. Third-Party Food Delivery Services
Section 4-4-801. Definitions.
Delivery Fee: A fee charged by a Third-Party Food Delivery Service for providing a Retail Food Establishment with a service that delivers food and beverages from such establishment to customers.
Core Delivery Service: A service that (1) lists a Retail Food Establishment, and makes the Retail Food Establishment discoverable, on all modalities or platforms offered by a Third-Party Food Delivery Service, including but not limited to any website, mobile application, or other internet service where a Third-Party Food Delivery Service lists Retail Food Establishments, (2) facilitatesand/or performs the delivery (through employees or independent contractors ofthe third-party fooddelivery service and/or such establishments) of food and/or beverages from Retail FoodEstablishments to customers, and (3) reaches residents throughout the City, provided that a ThirdParty Food Delivery Service may adjust delivery area at the request of a Retail Food Establishment,or to protect the health or safety offood, customers, or people performing deliveries. Core Delivery Service does not include any other service that may be provided by a Third-Party Food DeliveryService to a Retail Food Establishment, including but not limited to advertising services, search engine optimization, business consulting, or credit card processing.
Online Order: An order placed by a customer, including a phone order, for delivery or pick-upfrom a Retail Food Establishment located within the City.
Purchase Price: The menu price of the items contained in an Online Order, minus any applicable coupon or promotional discount provided to the customer by the Retail Food Establishment through the Third-Party Food Delivery Service. Such term therefore excludes taxes, gratuities and any other fees or costs that may make up the total amount charged to the customer of an Online Order.
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Retail Food Establishment: A restaurant, delicatessen, bakery, coffee shop, or other eat-in or carryout service of processed or prepared raw and ready-to-eat food or beverages.
Third-Party Food Delivery Service: Any website, mobile application or other internet service thatoffers or arranges for the sale of food and beverages prepared by, and the delivery or pick-up of food and beverages from no fewer than twenty (20) separately owned and operated Retail FoodEstablishments.
Section 4-4-802. Prohibitions.
It shall be unlawful for a Third-Party Food Delivery Service to do the following:
A. Charge a Retail Food Establishment a Delivery Fee that totals more than fifteen percent (15%) of the Purchase Price of each Online Order.
B. The fee limit in subsection A ofthis Section shall not apply to a Third-Party Food Delivery Service that does both of the following:
(1) offers all Retail Food Establishments the option to obtain Core Delivery Servicefor a total fee, commission, or charge not to exceed 15% ofthe purchase price of the online order, without requiring the purchase of additional services; and (2) no later than May 1, 2024, notifies all Retail Food Establishment that have an existing contract with the Third-Party Food Delivery Service of the option described in subsection B(l).
C. Charge a Retail Food Establishment any amount designated as a Delivery Fee for an Online Order that does not involve the delivery of food or beverages.
D. Charge a Retail Food Establishment any combination of fees, commissions, or costs for the Retail Food Establishment’s use of the Third-Party Food Delivery Service unless the contract between the Retail Food Establishment and the Third-Party Food Delivery Serviceallows for fees, commissions, and costs other than a Delivery Fee. For the purpose of this subsection, fees, commissions, or costs do not include the Delivery Fee.
E. Charge a Retail Food Establishment any fee, commission, or cost other than as permitted in subsections A through D, above.
F. Take any portion of the tip or gratuity that will be paid to the person delivering the food or beverages.
Section 4-4-803. Disclosures.
The Third-Party Food Delivery Service shall disclose to the customer before the final purchase anaccurate, clearly identified, and itemized cost breakdown of each transaction, including, but not limited to the following:
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A. The Purchase Price of the food and beverages at the cost listed on the Retail Food Establishment’s menu.
B. Each fee, commission, or cost charged to the customer by the Third-Party Food Delivery Service.
C. Any tip or gratuity that will be paid to the person delivering the food or beverages.
Section 4-4-804. Prohibition on Altering Restaurant Pricing.
A Third-Party Food Delivery Service shall not intentionally inflate or alter a Retail Food Establishment’s purchase price without the consent of the establishment’s owner or the owner’s designee, except that a Third-Party Food Delivery Service may charge additional fees to theconsumer in accordance with section 4-4-803.
Section 4-4-805. Termination of Services Notice Requirement.
A Third-Party Food Delivery Service shall terminate any service contract with a Retail FoodEstablishment within 72 hours after the Retail Food Establishment provides oral or written noticeof its decision to terminate the contract to the address or contact designated for communicationsregarding the termination or amendment of a contract in either the parties’ contract, or if no such address is noted in the contract, to the address or contact in the version of the Third-Party Food Delivery Service’s software application or website used by or accessible to the Retail Food Establishment, or if no such individual is so specified in either ofthe above, to either the individualdesignated on the website of the California Secretary of State as agent for service of process for the Third-Party Food Delivery Service, or to any officer or local or regional manager ofthe ThirdParty Food Delivery Service. For purposes of this Section, “written notice” shall include anywriting delivered by email, text message or similar message transmitted through phone or softwareapplication, facsimile, personal delivery, or mail service.
Section 4-4-806. Documentation of Commissions, Fees, and Terms.
Third-Party Food Delivery Services shall maintain records sufficient to document their compliancewith Sections 4-4-802 through 4-4-806, including but not limited to all relevant agreements, invoices, and transaction records, for three years from the date of any related customer transaction.
At any time, a Retail Food Establishment may direct any Third-Party Food Delivery Service to disclose any documents and records required to be retained with respect to any Retail Food Establishment. Any Third-Party Food Delivery Service so directed must disclose specifieddocuments and records to Retail Food Establishment within 72 hours, not counting weekends orholidays.
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Section 4-4-807. Violations.
If a Third-Party Food Delivery Service is in violation of this Article, including charging a RetailFood Establishment fees that violate this Article, the Retail Food Establishment shall provide written notice to the Third-Party Food Delivery Service requesting compliance with this Article, and a refund of excessive fees if applicable, within seven days. If the Third-Party Food Delivery Service does not take action to comply with this Article, or provide the refund requested if applicable, after seven days or the Third-Party Food Delivery Service continues to violate the termsof this Article after the initial notice and seven-day cure period, a Retail Food Establishment mayenforce this Article by means of a civil action seeking damages and injunctive relief Theprevailing party in any such action shall be entitled to an award of reasonable attorney fees.
Section 2. This Ordinance is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 1506 1(b)(3) which is the general rule that CEQA applies only to projects which have the potential to cause a significant effect on the environment,and CEQA does not apply where it can be seen with certainty that there is no possibility that theactivity may have a significant effect on the environment. It can be seen with certainty that theenactment of regulations on third-party food delivery services will not cause a significant effecton the environment. In addition, these regulations do not constitute a project that is subject to theprovisions of CEQA, pursuant to CEQA Guidelines Section 15378(b)(2) and (b)(5).
Section 3. Severability. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance or the application thereofto any person or circumstance, is for any reason held to be invalid or unconstitutional by the final decision of any court of competent jurisdiction, the remainder of this Ordinance shall be and remain in full force and effect.
Section 4. Publication. The City Clerk shall cause this Ordinance to be published at least once in a newspaper of general circulation published and circulated in the city within fifteen (15) days after its passage in accordance with Section 36933 of the Government Code, shall certify to the adoption of this Ordinance and shall cause this Ordinance and the City Clerk’s certification,together with proof of publication, to be entered in the Book of Ordinances of the Council of this City.
Section 5. Effective Date. This Ordinance shall go into effect and be in full force and effect at 12:0 1 a.m. on the thirty-first (3 1st) day after its passage.
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Section 6. Certification. The City Clerk shall certify to the adoption ofthis Ordinance.
Adopted:Effective:
LESTER J. FRIEDMANMayor of the City ofBeverly Hills, California ATTEST:
___________________________(SEAL)
HUMA AHMED
City Clerk
APPROVED AS TO FORM: APPROVED AS TO CONTENT:
LAURENCE S. WIENER NANCY HUNT-COFFEYCity Attorney City Manager B0785-0001\2870581v3.doc