Ontario is moving to cap fees charged by food delivery companies in areas where indoor dining has been prohibited due to the COVID-19 pandemic.
The Progressive Conservatives will introduce new legislation on Thursday that will cap delivery fees charged to restaurants by third parties at 15 per cent in areas where indoor dining has been banned. Total fees, including the delivery fee and other fees, cannot exceed 20 per cent. Companies that do not comply with the law could face permit fines of up to $10 million.
The government said the approach aims to ensure that delivery driver pay is protected, while service levels and restaurant selection remains the same.
“With this legislation, our government is helping local businesses stay in business, and providing a solution that will help our local restaurants when every little bit helps,” Prabmeet Sarkaria, the associate minister of small business and red tape reduction, said in a statement.
Restaurants using third party food delivery apps like UberEats, DoorDash and SkipTheDishes currently face fees as high as 30 per cent per order. Ontario Premier Doug Ford has previously urged third party delivery apps to consider reducing service fees in order to help restaurants through the pandemic, particularly in areas where indoor dining has been prohibited.
One of those companies is taking issue with the government’s legislation. Skip the Dishes chief executive Kevin Edwards said in a statement that the company is disappointed that the government has “decided to regulate private enterprise by enforcing a commission cap on food delivery services operating in this province.”
“Since the start of the pandemic we’ve worked tirelessly beside our restaurant partners and have proactively provided them with over $30 million dollars in industry leading support since March, months before being called upon by Premier Ford or Mayor (John) Tory to do so,” Edwards said. He added that, with the 25 per cent commission rebate that has been put in place in affected regions of the province, companies are currently paying less than 20 per cent in commissions.
Both UberEats and DoorDash released statements saying the companies plan to continue working with the government on this issue.
“We recognize the challenges restaurants are facing while indoor dining is prohibited, and the difficult decisions local leaders must make to stop the spread of COVID-19,” a DoorDash spokesperson said. “While we remain focused on solutions that best serve restaurants, customers, and Dashers, we are grateful for the opportunity to engage with the Premier, Associate Minister Sarkaria and their team on this issue.”
Uber also said it has supported restaurants through marketing campaigns, waiving activation fees and providing flexible fee options for restaurants.
Toronto’s city council had unanimously approved a motion last month asking the province to put a temporary cap on commissions charged by this party apps.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.