California bill would force DoorDash, UberEats to disclose ‘hidden’ restaurant fees

Online food delivery platforms such as DoorDash and UberEats tack on fees to restaurants, hidden from consumers, that can drive up the cost of those deliveries. A California lawmaker has introduced a bill intended to make it easier for consumers to see exactly what the delivery services are charging.

However, the bill’s sponsor has ties to scandal-plagued former Uber CEO Travis Kalanick, and critics of the bill warn that it could provide major restaurant chains with access to competitor information.

Senate Bill 1490 would require platforms such as GrubHub, DoorDash and UberEats to disclose to their customers what fees are being charged, both to them and to the restaurants.

Currently, California law only requires that such platforms inform customers that restaurants are being assessed certain fees, but not the amount of the fee.

It’s author, Sen. María Elena Durazo, D-Los Angeles, said in a statement of support that “customers and restaurants are paying high and often hidden fees when ordering through the big third-party delivery platforms.”

She went on to say that by providing customers with this transparency, they “can make informed decisions when ordering food from their favorite restaurants.”

Since the beginning of the COVID-19 pandemic, restaurants have seen a dramatic shift in their sources of revenue, as fewer people are dining in and more are ordering in. According to Durazo’s office, online orders make up 30-40% of restaurant revenue now.

The largest online food delivery platforms “abuse their leverage to impose high and hidden fees and actively cut restaurants off from their own customers,” her office said.

The bill is sponsored by the Digital Restaurant Association, which lobbies on behalf of the restaurant industry.

“Restaurants and customers alike deserve transparency to know exactly what fees are charged and who is receiving them,” the DRA said in a statement of support for the bill.

The DRA has ties to former Uber executive Travis Kalanick, who resigned from his post at the ridesharing company in 2017. Under his watch at Uber, the company saw a string of complaints, including allegations of sexual harassment, according to the New York Times.

According to Financial Times, Kalanick has business ties with Tusk Holdings, the firm behind the Digital Restaurant Association.

A representative for Kalanick did not respond to The Bee’s media inquiry.

“We believe SB 1490 could end up being a backdoor for large restaurant chains and Travis Kalanick’s startups to access competitors’ business information,” said Chamber of Progress Policy Director Ruth Whittaker in a statement.

The Chamber of Progress, a tech industry-funded, center-left group, opposes the bill.

Whittaker said that while SB 1490 “has many well-intentioned proposals,” she added that “there are a few provisions that don’t quite fit with the bill’s overall consumer focus and reveal the intentions of the bill’s corporate supporters.”

Whittaker said the provision requiring platforms to share what fees restaurants are paying is unnecessary.

“Consumers don’t need or care about this information — when was the last time you wondered what kinds of fees your local pizza place pays to a third-party delivery service?” she said.

However, major restaurant chains, which have the financial muscle to negotiate exclusive agreements with the platforms, “would love to be able to see what kinds of fees their competitors are paying,” Whittaker said.

The bill is set to be heard by the Senate Judiciary Committee and the Senate Business, Professions and Economic Development Committee later this spring.