Spokane Journal of Business

The Journal’s View: Food-delivery fees shouldn’t be set by local government


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Government shouldn’t interfere with free-market contracts between private enterprises. With that principle in mind, an idea floated by a couple of Spokane City Council members to cap third-party food-delivery fees shouldn’t move forward.

The Journal takes such a stance with full acknowledgement of the challenges restaurants have faced, due to COVID-related shutdowns as well as labor shortages, supply-chain issues, and soaring prices that have occurred in the pandemic’s aftermath. We have used this space to call on the business community to support local establishments and continue to champion that support, but we stop short of supporting governmental price setting for services.

At the same time, DoorDash, Uber Eats, and other delivery services shouldn’t make the mistake of being tone-deaf to the concerns of the restaurants with which they work. Self-regulation is a viable option, and efforts to be more transparent with pricing and provide a greater variety of rates could reduce attempts to regulate. In hearing the grievances of Spokane-area restaurateurs, it becomes clear that there’s room for improvement in that business model.

Some large cities, including Seattle and Minneapolis, already have capped the commission fees that delivery companies can charge restaurants at 15%. During the pandemic, Gov. Jay Inslee set a similar 15% cap on commission fees statewide as one in a series of emergency decrees. That cap was lifted earlier this year.

According to Spokane City Councilman Zack Zappone, who is among those considering commission caps, delivery companies are charging restaurants up to 35% commissions, in addition to fees charged to consumers who use their apps.

Zappone recently told the Journal, “Government has always had a role in defining market boundaries.”

That might be the case when talking about utilities or public safety, but whether that extends to discretionary services such as food delivery is very questionable.

The executive committee for Visit Spokane, the region’s visitors and convention bureau, is in favor of the commission caps. Meg Winchester, the organization’s president and CEO, says the committee wants some certainty for an industry that has been hit hard in recent years.

Greater Spokane Incorporated, however, came out against capping commission fees, with a statement that said, in part, “GSI opposes efforts to cap prices and commissions negotiated between merchants that will stymie innovation in emerging markets, limit consumer choice, and undermine the right to contract.”

While restaurateurs might dispute their negotiating powers when working with the large tech companies, GSI is justified in its concerns about such regulation.

Furthermore, GSI points out an element of the dynamic that largely is missing from the commission-cap conversation. Restaurants that appear in food-delivery apps are exposed to consumers who might not order from those venues otherwise. They stand to expand their customer base and be more competitive in an already competitive market. Does that benefit outweigh the compromised profit margins caused by commission fees? That likely depends on the establishment.

Hopefully, the private sector can strike a balance between the benefits of additional exposure from delivery companies and the pricing structure for such services. Ideally, the delivery companies come to the table for those conversations. Regardless, it needs to happen without government intervention.

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