Ontario officially proposes cap on delivery fees to support local restaurants
The provincial government is introducing new laws to protect local restaurants from the impact of Ontario’s high grocery delivery charges.
The Supporting Local Restaurants Act 2020 would limit Ontario grocery delivery company fees in areas where indoor eating is prohibited to help more small and independent restaurants stay in business.
According to a government press release, fees charged by grocery suppliers for restaurants in Ontario can reach as high as 30 percent. After working with the sector, Deputy Minister for Small Business Prabmeet Sarkaria said restaurants should expect a 15 percent cap on delivery fees, similar to New York City, with an overall cap of 20 percent including all fees.
According to Ontario, this approach is intended to ensure that the delivery driver’s payment is protected and that delivery apps do not restrict service areas or restaurant choices.
However, groups like the Canadian Union of Postal Workers (CUPW) and app-based mail carriers have stated that they have “great concerns” about the move.
Summary of food delivery measures
In summary, the legislation would:
- Limit the prices of food delivery services and apps in areas where indoor eating is prohibited.
- Allow fines of up to $ 10 million for grocery delivery services that violate the law.
- Provide food delivery service employees or contractors who provide delivery services with protection that these changes will not affect their compensation.
“Ontario’s small and independent restaurants have borne an overwhelming share of the economic burden of COVID-19,” Minister Sarkaria said. “But in the meantime, they have continued to serve our communities and families and have lifted our spirits. With this legislation, our government is helping local businesses stay in business and offering a solution that will help our local restaurants if every little bit helps.
This legislation follows a call from Toronto in late October when a motion to ask the province to limit third party delivery commissions was unanimously adopted by the city council.
A statement from the Ontario Restaurant, Hotel, and Motel Association (ORHMA) noted that it is questioning the high delivery fees of third-party suppliers on behalf of the Ontario restaurant industry. They say it welcomes the law.
Tony Elenis, President and CEO of ORHMA, said, “The vast majority of restaurants make 2 to 3 percent profit from delivery services, with many operating at a loss. The problem is disproportionately more criminal for smaller businesses. A permanent solution is required through an ordinance limiting commission fees. We thank the Ontario government for their efforts to regulate fees and take some of the pressure off restaurants. “
Contradiction from delivery services and trade unions
However, the move has not found general support. In addition to opposition from CUPW, Kevin Edwards, CEO of leading Canadian delivery company SkipTheDishes, stated in a statement to RestoBiz that the company is “disappointed” that Ontario plans to regulate grocery deliveries with a commission cap.
Edwards added that SkipTheDishes has already introduced a 25 percent commission discount in severely affected regions of Ontario, meaning that “all local, independent restaurant partners on the SkipTheDishes platform are already paying less than 20% commission while their dining rooms are closed” .
Other government measures
Meanwhile, the Ontario government has also announced $ 600 million to help local restaurants and businesses with fixed costs, including property taxes, water and gas bills. The government says it is also helping small businesses and restaurants through its Main Street Recovery Plan by:
- The obligation to permanently allow licensed restaurants and bars to add alcohol to meals as part of a take-away or delivery order before the applicable regulation expires;
- Offering the Main Street Relief Grant of $ 60 million, which will provide up to $ 1,000 to help eligible small businesses with PPE costs;
- Permanently allow delivery companies to offer round-the-clock deliveries, which provides the flexibility required;
- Helping Nearly 23,000 Small Businesses Grow Online With $ 2,500 Grants Through Digital Main Street; and
- We offer free financial advice and online training to help small businesses make informed decisions and manage the unprecedented economic circumstances caused by the pandemic.
Similarly, restaurants can learn from the pizza chain delivery model