Ms. ElizabethGarciaEconomicDevelopment Project ManagerCityof Culver CityMarch16, 2023 Dear Ms. Garcia,
Thankyoufor theopportunitytoprovidewrittencommentsregardingtemporarylimitsonthird-partyfooddeliveryservicefeesinCulver City.
In2020, asaresponsetotheCOVID-19pandemic, theCityof Culver Cityput inplaceanordinancelimitingthetotal amount of fees, commissions, andcoststhat Third-PartyFoodDeliveryServicesmaychargetoretail foodestablishments. Thesetypesof regulationswereenactedthroughout theStateof California, andwereeither tieddirectlytotheGovernor’sCOVID-19Stateof Emergencyor tolocal publichealthorders, includingonepassedbytheCountyof LosAngeles.
Asthesetemporaryemergencyhealthorderscometoanendacrossthestate, it isappropriatefor policymakersandregulatorstodeterminewhat along-termregulatoryschemeshouldconsistof. Weappreciatethat theCityCouncil hascreatedaregulatorymodel that allowsfor flexibilityandprotectstheabilityof different restaurantstoenter intocontractsthat helpmeet theirdifferent businessgoals. Asit relatestocommissionfees, thecurrent ordinancereflectsanunderstandingthat themarketplaceisfluid, andallowsfor restaurantstopursuethebusinessarrangement withthird-partydeliveryservicesthat worksfor them.
However, thecustomer-facingdisclosurerequirementsinCulver City’stemporaryordinancehavebeenrenderedunnecessarybyCaliforniaAB286, whichwasenactedin2021 andwent intoeffect onJanuary1, 2022. Thisstatelawalreadyrequiresthat fooddeliveryplatformsdisclosetoboththefoodfacilityandthecustomer “Anotice, if applicable, that thefooddeliveryplatformchargesafee, commission, or cost tothefoodfacility, unlessthefoodfacilitydirectsthat thefooddeliveryplatformdisclosetocustomersthedeliveryfeechargedtothefoodfacilityandeachfee, commission, or cost chargedtothefoodfacility.”Thislawrepresentsanappropriatebalancebetweenmerchant andconsumer interests, securingaconsumer’sright tounderstandthat merchantsarechargedafee, whilerecognizingthat amerchant maynot wishtogiveitscustomersfull disclosureintoitsbusinessandpricingdecisions. Culver City’sregulationsshouldnot requireathirdpartydeliverycompanytodiscloseconfidential termsof privatebusinesstobusinesscontracts, beyondnoticethat thecontract itself exists, asalreadyrequiredbystatelaw.
All of thefeesafoodfacilitypaystoafooddeliveryplatformarevoluntaryandconfidential.Additionally, thisinformationishighlycompetitivebetweenfooddeliveryplatformcompaniesandbetweenfoodfacilities, specificallyrestaurants. Somerestaurantschoosetooffer deliveryusingtheir ownstaff, whileotherschoosetopartner withdeliveryplatformsor asimilar service. Thosethat dochoosetopartner withadeliveryplatformhaveawidevarietyof platformstochoosefrom, andeachplatformoffersproductsthat aretailor-madetomeet theneedsof restaurantsand
other foodfacilities, fromthelargest chainstothelocal mom-and-pops. Thedetailsof theseprivatebusiness-to-businesscontractsshouldremainprivatebetweenthepartieswhovoluntarilynegotiateandagreetothesecontracts. Disclosureof granular informationonmerchant fees,whichmaydiffer acrossplatforms, wouldcreatesignificant businessdisruptionandharmcompetitionthroughout theindustry.
Asawhole, it isimportant toconsider thetremendousvaluethird-partyfooddeliveryservices,suchasthoseofferedbyUber EatsandPostmates, offer toanylocal community. AsmembersoftheCityCouncil areaware, fooddeliverynowplaysasignificant roleintheeconomyof CulverCity. Uber EatsandPostmatesrepresent millionsof dollarsof revenueeachyear for localrestaurants, andprovideearningopportunitiesfor thousandsof local deliverypeopleeachmonth. But morethansimplybeingamodernfixtureof howpeopleenjoyaccesstorestaurants,theuseof fooddeliveryservicesyieldsseveral significant benefitsfor therestaurantsandmerchantsthemselves.
Theuseof fooddeliveryappsenablesrestaurantstoaccesscustomersthat wouldotherwisebeunreachable, andinparticular, allowsfor smaller merchantswithout theabilitytooperatetheirowndeliveryservicetoexpandtheir businesswithout acustomer needingtocometothem.Most importantly, engaginginbusinesswithathird-partyfooddeliveryservicealsoenablesanindividual merchant tochoosetoreceiveadditional servicesbeyonddelivery, includingmarketingandpromotionsthat wouldotherwisebeunavailabletothem. Theuseof theseservicesimproveslocal business’ abilitytocompetewithlarger restaurantsandnational chains, andgivesalocal restaurant theopportunitytogainnewloyal customersfrompeoplealreadyfamiliar withdeliveryapps.
Encouragingtheuseof fooddeliveryservicesaddstotheeconomicvitalityof Culver City’srestaurants, andit isimportant tocreateamarketplacewheretheseservicesareabletocontinuemaximizingopportunitiesfor local business.
WegreatlyappreciatetheopportunitytoprovidefeedbackandthankyouandtheCityCouncilfor your attentiontothisimportant matter. Pleaselet usknowif youhaveanyquestionsor needanyadditional informationmovingforward.
Sincerely,
JohnL. FinleySr. PublicPolicyAssociate, SouthernCaliforniaUberjfi[email protected]