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Food-delivery apps take bite out of KCMO restaurant profits

Councilman proposes ordinance to limit fees
KC Smoke Burgers.jpg
Posted at 6:35 PM, Jan 17, 2021
and last updated 2021-01-18 12:08:43-05

KANSAS CITY, Mo. — As restaurants struggle to stay afloat during the COVID-19 pandemic, one Kansas City, Missouri, councilman hopes to ease a separate financial burden restaurants have faced.

Many third-party ordering apps, such as Door Dash and Grub Hub, charge delivery commissions. But District 4 Councilman Eric Bunch is proposing an ordinance to temporarily limit how much the apps can charge restaurants -- with a cap of 15%.

Daya Elzarka, owner of KC Smoke Burgers on 39th Street in Kansas City, Missouri, said Door Dash charges around 27%, while Uber Eats, Postmates and Grub Hub's fees range from 18% to 20%. Those percentages take away from Elzarka's profits.

"If we do like $2,000 dollars a week, they will take like at least $7-800 dollars in fees," he said.

During the pandemic, Elzarka said operating a restaurant has been a struggle.

"We're barely surviving," he said. "We're just paying the bills."

Industry experts said the fees restaurants incur are not noticeable to consumers.

"When you're using these services, Uber Eats, for example, will show you 49 cents delivery. GrubHub makes it often seem like you're getting free delivery, and it may be 49 cents for you plus their service charge, which they tack on at the end, but for the restaurants that you're supporting the fees are much much larger," Kevin Brasler, with Consumers' Checkbook, said.

Elzarka said Bunch's proposal would help him stay in business.

"If they lower it a little bit so we'll make some money and they make some money it will be fair for both of us," he said.

Door Dash said in a statement on its website why the company is against cities limiting these fees.

"Because of the range of costs that we have to cover for delivery, when a government jurisdiction imposes price controls, it may cause us to increase the fees we charge to consumers. Increasing costs for customers could lead to fewer orders, which reduces business for restaurants and work opportunities for Dashers."

The ordinance goes in front of KCMO's Finance, Governance and Public Safety Committee at 10:30 a.m. on Wednesday.